SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer 

Pursuant to Rule 13a-16 or 15d-16 under the 

Securities Exchange Act of 1934

 

For the month of February 2023

 

Commission File Number: 001-14014

 

CREDICORP LTD. 

(Translation of registrant’s name into English)

 

Of our subsidiary 

Banco de Credito del Peru: 

Calle Centenario 156 

La Molina 15026 

Lima, Peru 

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒ Form 40-F☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

 

 

 

February 27, 2023

 

Securities and Exchange Commission - SEC 

Re.: MATERIAL EVENT

 

Dear Sirs:

 

Credicorp Ltd. (‘Credicorp’) notifies you, as a Material Event, that in its session held on February 23, 2023, the company’s Board of Directors agreed unanimously on the following matters:

 

1.	Approved the Annual and Sustainability Report of Credicorp for the financial year ended December 31, 2022, that the Chairman will present at the Annual General Meeting of Shareholders on March 27, 2023, at 3:00 p. m. (Peru time) (the ‘AGM’).

2.

Approved the audited consolidated financial statements of Credicorp and its subsidiaries for the financial year ended December 31, 2022, including the report of the external auditors Gaveglio Aparicio y Asociados Sociedad de Responsabilidad Limitada, members of PricewaterhouseCoopers in Peru, that the Chairman will present at the AGM.

3.	Approved to present for approval to the AGM: (i) the list of proposed candidates that will hold office for the period 2023 – 2026, and (ii) their remuneration. The proposed candidates are:

•

Antonio Abruña Puyol

•

Nuria Aliño Pérez

•

María Teresa Aranzábal Harreguy

•

Alexandre Gouvêa

•

Patricia Lizárraga Guthertz

•

Raimundo Morales Dasso

•

Leslie Pierce Diez-Canseco

•

Luis Romero Belismelis

•

Pedro Rubio Feijóo

4.

Agreed to recommend for consideration of the AGM (i) the appointment of Tanaka, Valdivia & Asociados S. Civil de R.L., members of Ernst & Young Global in Peru, as the external auditors of Credicorp and its subsidiaries for the financial year 2023, with the previous authorization of the Audit Committee; and (ii) the delegation of the power to set and approve fees for such audit services to the Board of Directors (for further delegation to the Audit Committee thereof).

Documents mentioned above are available through the following hyperlink: https://credicorp.gcs-web.com/annual-materials.

 

The information in this Form 6-K (including any exhibit hereto and any information available through the hyperlink above) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.

 

Sincerely,

 

/s/ Miriam Böttger 

Authorized Representative 

Credicorp Ltd.

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: February 27, 2023

 

	CREDICORP LTD.
	(Registrant)
	By:	/s/ Miriam Böttger
		Miriam Böttger
		Authorized Representative

---

Exhibit 99.1

Annual and Sustainability Report

 

 

2022

 

Annual Report

---

Letter from the Chairman of the Board	3
Our Purpose, Vision and Values	7
Statement of responsibility	8
Credicorp at a glance	9
Group Description	11
Our businesses in 2022	18
Economic Environment	21
Economic and Financial Performance	25
Risk Management	36
Financial Statements	52
Annexes	57

Letter from the Chairman of the Board

 

GRI 2-22

 

Dear shareholders, clients, employees and members of the communities we serve,

 

It is my pleasure to present to you our Annual and Sustainability Report 2022, through which I share my reflections on our current context, the role we play at Credicorp, advances in executing each of our business’s strategies, and my perspectives for the future. I am proud of the progress we have made over the past few years. We place our purpose at the center of all of our decisions and seek to be agents of change to drive development and growth in the countries in which we operate.

 

In a 2022 marked by challenges on the global and local fronts, we adapted and advanced in the process to execute our strategy.

 

The year 2022 evolved in a context of considerable volatility. At the global level, the Russian invasion of Ukraine and other geopolitical tensions led international prices for energy and food to climb. In response, many countries were embattled by high levels of inflation, and subsequently hardened their monetary policies. Additionally, in our region, government instability and heightened levels of confrontation between branches of Government in Peru; the shift to a left-wing government in Colombia; and uncertainty in Chile due to the constituent process, negatively impacted the trust of households and companies and pressured dynamics for economic growth.

 

The Peruvian economy expanded 2.7% in 2022, supported by an uptick in private consumption, which was spurred by recovery of employment and loosening of restrictions on access to pension savings and severance indemnity accounts (CTS). This economic result unfurled despite political certainty and a deterioration in the terms of trade. Inflation in Metropolitan Lima stood at 8.5%, which was the highest print seen in the last 26 years. In this context, BCRP revised its reference rate upward from 2.5% to 7.5%. The exchange rate fell 4.3% over the period to close 2022 at S/3.81.

 

It is important to note the economic performance of Bolivia, Colombia and Chile, where we operate. In 2022, the Bolivian economy grew 4%, which reflected a return to pre-pandemic activity levels; high prices for oil, natural gas and metals; as well as a policy to subsidize fuel and gas, which mitigated the impact of inflation. The Colombian economy expanded around 8%─ one of the world’s highest prints─ despite a context marked by a change in government. The economy was driven by favorable terms of trade and strong household consumption. Chile, in turn, experienced a deceleration in its economy, which grew 2.9%. This evolution was driven by a drop in private consumption and resilient investment, in a context in which copper prices remain high. Political uncertainty decreased after the new constitution was rejected in the referendum held in September.

 

I am proud to say that, despite headwinds, Credicorp is firmly advancing toward achieving our objectives thanks to our employees’ attitudes and commitment and the solidness of our strategic focus. We identify and manage risks agilely, modulating our appetite in certain segments and sectors. In parallel, our client-centered approach allowed us to improve our value proposition and expand the client base, which sets the stage for future growth. Finally, we strengthened our relations with our investors and generated value for our stakeholders. Our leaders’ vast experience in managing businesses in volatile and uncertain environments, coupled with the talent of our employees, was a fundamental driver of our progress.

 

We are committed to our purpose and anticipate the needs of our stakeholders as we develop each of our businesses and generate resilient results.

 

In 2022, a number of trends, whose evolution was accelerated by the pandemic, continued to progress rapidly alongside growth in stakeholder expectations regarding, in particular: the positive impact that our companies should generate; a rise in the appetite of new generations of talent for different forms of working; and accelerated changes in our clients’ needs, which requires on-going innovation.

 

At Credicorp, we share the conviction that we have a responsibility to positively impact the communities in which we operate. This is the only way we can ensure our competitiveness and create long-term value. Accordingly, we drive initiatives on the Governance, Social and Environmental fronts through our businesses. In 2022, we continued to strengthen our Corporate Governance structure and trained our directors and employees in areas related to sustainability. On the Social front, we leveraged our competitive advantages to become a key facilitator in financial education and inclusion in the Andean region, by rolling out diverse initiatives at our subsidiaries. Last year, for example, we included more than 1.1 million Peruvians in the financial

 

system through Yape and our financial education series, “El Quinto Piso,” topped 47 million views. Finally, on the Environmental front, we committed to achieving carbon neutrality at our own operations by 2032 and developed our ESG risk management framework, setting the bases to facilitate our clients’ transition to eco-sustainable models. In addition to the impact generated by our ESG initiatives, thanks to our operations in 2022, we distributed around S/2,127 million in tax revenues for governments and investments in communities.

 

Throughout the world, employees now expect benefits different from those that companies are accustomed to offering. These include more flexibility and job profiles that generate an impact. At Credicorp, we are determined to be “the best place for the best talent.” As such, we have been promoting a hybrid work model, where remote work strengthens the life balance and productivity, and have generated office spaces to drive our talent’s creativity and innovation. The hybrid model, which is here to stay, helps strengthen our employees’ ties to the company and enhances feeling of belonging and loyalty to the organization. This consequently increases their desire to continue developing our culture.

 

Similar to our employees, our clients experience changes in their needs. They seek not only a better user experience, immediacy and personalization, but also demand more security. To meet these expectations, we are relying increasingly on technological capacities and data and analytics. We have been strengthening these aspects through our recruiting and training processes as we accelerate our pace of investment in transforming our businesses. Along these lines, we have progressed in our efforts to build more flexible and efficient architecture based on application program interfaces (APIs). We are conscious of the fact that our clients’ trust is one of our main assets and as such, have prioritized our cybersecurity. We educate our clients and create awareness of cyber risks and constantly train our employees; increase the robustness of our processes; and continuously implement new technologies to protect our businesses.

 

Developing each of our businesses

 

To accelerate our innovation strategy, at the beginning our 2022, we created a system of governance at the Credicorp level, led by the new role of Chief Innovation Officer. We defined our investment appetite for disruptive innovation and the domains in which we wish to participate. In the first stage, we invest mainly in domains such as payments, digital loans, neobanks, acquiring and added-value services for SMEs. We aspire to develop initiatives in Peru and in other countries in the region. With regard to the Krealo portfolio, our corporate venture capital center, growth in Tenpo in 2022 was noteworthy with more than 1 million new clients added. Additionally, Krealo incorporated 2 new ventures in its portfolio: Samishop in Peru, which strengthens the region’s ecosystem of the value-added services we offer SMEs, and Monokera in Colombia, whose objective is drive penetration of digital insurance in the region. Going forward, the initiatives in our innovation portfolio will begin to generate revenues.

 

In Universal Banking, we are reaping the fruits of our businesses’ investments in digital transformation and maintain favorable perspectives.

 

BCP continued to focus on offering its clients and extraordinary experience while optimizing its operating efficiency. Our results on the transformation front have led our Net Promoter Score (NPS) for digital channels to rise 21 percentage points and our digital sales hit 61.4% (of total units sold) in Retail Banking. Thanks to our clients‘ trust, we consolidated our position as Peru’s transactional hub and participated in 47% of the total amount transacted in the banking system in the month of December. In 2023, we will leverage our data analytics capacities to continue evolving our segmentation and understanding or our clients’ behavior. We will design a differentiated value proposition for each segment with an eye on becoming the main bank of more Peruvians. We aspire to improve our NPS indicator to rank #1 for this indicator, which will strengthen our competitive position.

 

Yape progressed considerably in its quest to become a super app and today has more than 11.5 million yaperos; 8 million active users; and more than 3 million affiliates that generate revenue. In 2022, Yape’s market share was around 25% of the mobile top-off market and the app has added the following to its digital payment functions: i) benefits, such as promotions or discounts at businesses, and ii) financial products, such as nano-loans and access to a low-ticket investment platform. These new functionalities, without a doubt, will help us drive the financial inclusion agenda. Yape’s objective is to achieve neutral cash flow in 2024.

 

At the Banco de Crédito de Bolivia, we made progress in our efforts to digitalize services. The number of transactions through digital channels rose 77% last year and we doubled the number of users of our mobile wallet SOLI, which stood at 442 thousand at year-end. We aspire to make SOLI the frontrunner in QR payments in Bolivia and aim to triple the number of users in 2023.

 

In Microfinance, we consolidated our business recovery after the pandemic and evolved our business models in Peru and Colombia by optimizing experience, efficiency and growth.

 

Mibanco Peru consolidated the hybrid model, which leverages Data Analytics and Technology to achieve a scheme for relations that efficiently brings us closer to our clients. We scaled the application of the centralized intelligence engine to assess loans; originate commercial offers; and step-up distribution through alternative channels. In 2022, 76% of disbursements were

 

generated through offers derived from the intelligence engine. The number of loans disbursed through alternative channels represented more than 45% of total loans. These advances, which went hand-in-hand with impeccable commercial execution, led to a significant improvement in the efficiency indicator, which stood at 51.3% at year-end. Going forward, we will strengthen our relations with our clients, backed by the power of new analytical and technological capacities.

 

Mibanco Colombia consolidated its traditional model, which is 100% based on relationship managers and branches. In addition to improvements in productivity, we have become a point of reference for loan risk management and have the lowest delinquency ratio of all microfinance players in Colombia. In parallel, we have set the bases to migrate to a hybrid model and in 2022, 60% of disbursements were generated through offers derived from the centralized intelligence engine. In the future, we aspire to consolidate the hybrid model that has been generating good results in Peru.

 

In Insurance and Pensions, we contribute to developing systems in which more Peruvians are interested in participating.

 

At Pacífico, we have entered into alliances with different insurtechs to reduce our service times and consolidate our position as the insurer with the best Net Promoter Score in the market. Additionally, to protect the happiness of more people, we have expanded our offerings with a noteworthy increase in inclusive insurance: Tu Plata Segura, through Mibanco and Efectivo Protegido, through BCP Agentes. In 2023, we seek to be #1 in terms of growth, bolstered primarily by the bancassurance channel.

 

At Prima AFP, we will continue to be proactive in collaborative efforts to develop proposals to reform the regulatory framework and create awareness programs. The objective is to evolve toward an inclusive and sustainable pension system, which continues to serve as a mechanism to channel savings to long-term investment and contributes to our economy’s growth.

 

Finally, in the Investment Banking and Wealth Management business, we focus on responding to the challenges wrought by volatility in the region. Currently, we are in the final stage of a comprehensive assessment of our strategy. We have identified key levers to reach our long-term profitability targets. We seek to focus on finding the right businesses to drive our growth in a new scenario in the region and in the face of new perspectives.

 

We generate resilient results

 

The year 2022 was characterized by a normalization in our profitability level and l now say that we have consolidated our recovery post-pandemic. Net income after minority interests totaled S/. 4,633 million, which translated into an ROE of 16.7%.

 

Banca Universal led the recovery, which was driven by Core Income at BCP and by Net Interest Income in particular. Microfinance also experienced substantial recovery in its profitability, which was fueled by favorable dynamics for Net Interest Income at Mibanco and linked to effective pricing practices and commercial execution. Insurance and Pensions returned to positive terrain, steered mainly by a decrease in claims in the Life insurance line at Pacífico Seguros. Investment Banking and Wealth Management, in turn, continued to face challenges and registered a drop in profitability, which was primarily attributable to a decrease in total assets under management.

 

Total loans rose 0.7%, which reflected an uptick in structural loans at BCP and Mibanco in a context of economic reactivation.

 

In terms of portfolio quality, the structural NPL ratio increased slightly (4.95% vs 4.86% at the end of 2021). This evolution was driven primarily by growth in refinanced loans. The government loan (GP) portfolio deteriorated but is backed by extremely broad coverage through State guarantees. On the provisions’ front, the impact of rising inflation on consumer behavior, along with our incursion in higher-risk profiles in the SME segment, led the portfolio’s cost of risk to increase 1.22%, as it moves toward pre-pandemic levels.

 

The net interest margin rose 97 basis points with regard to 2021, impacted by repricing management in an environment of rising rates. The shift toward a higher-yield asset structure, and a competitive funding structure, contributed to this result.

 

Other income rose 3.6% over the year, fueled by the positive evolution of Fee Income (+4.2%), where growth was buoyed by an increase in fees for banking services and by the Net gain on FX transactions (+17.5%). The Insurance Underwriting Result was in positive terrain at year-end, which reflects a normalization in claims in the Life insurance line at Pacífico Seguros.

 

In the aforementioned context, operating income increased 15.1% in 2022. Operating expenses rose 11.4%, driven by a rebound in variable compensation due to an uptick in results and growth in the pace of investments in digital transformation. This led the efficiency ratio to stand at 44.4%.

 

As a matter of course, we prioritized responsible capital management at all of our subsidiaries. We maintained adequate solvency levels and distributed cash dividends equivalent to S/1,196.4 million soles.

 

Looking toward the future with optimism

 

We enter 2023 with favorable dynamics for emerging economies. China’s recent reopening and its decision to relax its “Covid-Zero” policies bolstered global growth and commodity prices. Inflation in the United States is subsiding, which has led the Fed to attenuate its hard line and alleviated pressure on emerging economies. At the beginning of the year, Peru suffered intense social upheaval, which led to the loss of valuable lives and severely damaged the interests of private companies and public infrastructure. We are monitoring progress on this front and maintain a moderate perspective for economic growth in Peru of 2.0%. Our economic estimates remain at 3.1% and 1.3% for Bolivia and Colombia respectively and we expect a slight contraction in Chile.

 

I am hopeful that the next general elections in Peru will bring the stability that we need to begin rebuilding a country in an environment of peace, democracy and inclusion. Our institutional framework and macroeconomic fundamentals, which allowed the country to register 14 consecutive years of reductions in poverty prior to the pandemic, remain intact. It is our hope that the authorities elected move to protect these fundamentals; prioritize solutions for problems in the ambits of health, education and poverty; and resume efforts to strengthen our institutions.

 

Private companies must assume responsibility and collaborate to find solutions to society’s problems. At Credicorp, we will accelerate the implementation of our agenda for financial inclusion and education, two factors linked to poverty reduction. By advancing inclusion, we help vulnerable people achieve greater security through savings, more possibilities to generate income, and higher levels of economic independence. We aspire to contribute to improving lives by accelerating the changes that our countries need.

 

At this time, I would like to express my sincere hope that violence ceases both in our country and the world. If we focus on strengthening human relations and seeking the common good for all citizens, we will no doubt advance in the direction toward peace and strengthened democracy. To this end, we promote values such as empathy, respect and equity, which we must strive to recover in our society.

 

Finally, I would like to thank our clients and investors for the trust they have bestowed and our 36 thousand employees, whose proactivity, commitment and resilience have been fundamental. The financial results achieved, the progress we have made to achieving strategic objectives, and the positive impacts we have generated for our communities, validate, even in this challenging environment, that we are on the right path. We begin this new year on stronger competitive footing thanks to our focus on attracting and retaining the best talent; our bet on investing in developing top-tier technological capacities; and our commitment to integrating sustainability at the core of everything we do.

 

I am enthusiastic about the opportunities that lie ahead in 2023.

 

Luis Enrique Romero Belismelis

Our Purpose, Vision and Values

 

GRI 2-23

 

Purpose

 

Contribute to improving lives by driving the changes that our countries need.

 

Vision

 

To be a sustainable financial services leader in Latin America. We are purpose-led, future-oriented and focused on creating superior value for our employees, customers, shareholders and the countries we operate in.

 

Values

 

-

Respect

-

Fairness

-

Honesty

-

Sustainability

 

Statement of responsibility

 

“This document contains truthful information regarding business developments at Credicorp Ltd. and Subsidiaries in 2022. The signatories shall be liable, within the ambit of their faculties according to the norms of the Civil Code, for damages that any lack of veracity or insufficiency that the contents of these documents may generate.”

 

César Ríos Briceño	José Luis Munoz Rivera
Chief Financial Officer	Head of Accounting
	C.P.C. N° 14902

 

23/02/2023

 

Credicorp at a glance

 

GRI 2-1, 2-6

 

 

 

 

1. Includes net interest income, other income and net earned premiums less net claims.

2. A natural or legal person could be a client of more than one subsidiary

3. Includes Peru, Colombia, Chile and Miami.

4. For more information about our employees, review chapter "3) Social - Employees" of the Sustainability Report

 

 

 

Relevant figures and indicators

 

	Ratios	2019	2020	2021	2022
Loan growth1	In local currency (%)	9.2	24.8	13.5	4.3
	In foreign currency (%)2	1.5	-1.0	-7.3	4.7
	Total (%)	6.6	16.6	9.9	3.9
Margins and Profitability	Net interest margin (NIM, %)	5.4	4.3	4.1	5.1
	Cost of risk (%)	1.6	4.3	0.8	1.2
	Return on average assets (ROAA, %)	2.3	0.2	1.5	1.9
	Return on average equity (ROAE, %)	17.0	1.4	13.9	16.7
Efficiency	Efficiency ratio (%) 2,3	43.6	46.3	45.9	44.4
Portfolio Quality	Internal overdue ratio (%) 4	2.9	3.4	3.8	4.0
	NPL ratio (%) 5	3.9	4.6	5.0	5.4
Capital8	BCP Global Capital ratio (%) 6	14.5	14.9	14.9	14.4
	BCP Tier 1 ratio (%) 7	11.1	10.4	9.9	10.0
	BCP Common Equity Tier 1 ratio (%) 8	12.4	11.4	11.9	12.6
	Mibanco Common Equity Tier 1 ratio (%) 8	15.7	17.7	15.2	16.5
Employees	Permanent personnel (units)2	34,918	36,806	36,396	36,968
Shares	Number of floating shares (millon) 9	79.51	79.47	79.53	79.53

 

¹ Average daily balances. 

² Figures differ from previously reported.

³ Efficiency is calculated as: (salaries and employee benefits + administrative expenses + depreciation and amortization + association in partcipation + acquisition cost) / (net interest income + fee income + net gain on foreign exchange transactions + net earned premiums + net gain from associates + net gains on derivatives held for trading + net gain from exchange difference).

⁴ Internal overdue loans / total loans.

⁵ NPL (non-performing loans) = internal overdue loans + refinanced and restructured loans. NPL ratio = NPLs / total loans.

⁶ Regulatory Capital / Risk-weighted assets (legal minimum=10% since July 2011).

⁷ Tier 1 / Risk-weighted assets.

⁸ Common Equity Tier 1 Ratio = (Capital + Reserves - 100% of applicable deductions (investment in subsidiaries, goodwill, intangibles and deferred tax that rely on future profitability) + Retained Earnings + Unrealized gains or losses) / Risk-weighted assets. Based on NIIF.

⁹ Net of treasury shares. The total number of issued shares is 94.38 million.

Chapter 1 

Group Description

 

General Information 

GRI 2-1, 2-6

 

Commercial Name:	Credicorp Ltd.
Address	Clarendon House  2 Church Street  Hamilton, Bermuda
Address of the Main Subsidiary and Headquarters	Calle Centenario 156, La Molina. Lima, Peru
Telephone	+51 1 313-2000
Fax:	+51 1 313-2121

 

Credicorp Ltd. was established on August 17, 1995, in the City of Hamilton in Bermuda and is registered under registry No. EC21045. The company’s duration is indefinite.

 

Company Purpose

 

Credicorp is a business group that, through its subsidiaries and associates, offers a wide range of financial, insurance and health services and products, mainly throughout Peru and in other countries such as Colombia, Bolivia, Chile, Panama and the United States. Its main subsidiaries are: Banco de Crédito del Peru (BCP), Mibanco, BCP Bolivia, Pacífico Compania de Seguros y Reaseguros, Prima AFP, ASB Bank Corp. (formerly Atlantic Security Bank) and Credicorp Capital.

 

Credicorp was set up in 1995 through the acquisition of common shares of the Banco de Crédito del Peru (BCP), Atlantic Security Holding Corporation (ASHC) and Pacífico Compania de Seguros y Reaseguros S.A. (PPS). Through an Exchange Offer in October 1995, Credicorp acquired 90.1% of the shares of BCP, 98.2% of the shares of ASHC, and 75.8% of those of PPS. Trading of the common shares on the New York Stock Exchange began immediately after the Exchange Offer culminated and the closing price on this date was US$ 11.61 (adjusted to reflect stock dividends). On March 19, 1996, Credicorp acquired, through an Exchange Offer with similar terms to the one made in October 1995, the remaining 1.8% of shares in circulation of ASHC.

 

In 2012, Credicorp, as part of its strategic plan, embarked on efforts to create a regional platform and a reorganization process to regroup the company’s businesses. In April 2012, Credicorp, through its BCP subsidiary, acquired 51% of the shares of Correval S.A. Sociedad Comisionista de Bolsa, an investment bank in Bogota, Colombia. In July 2012, Credicorp, through its BCP subsidiary, acquired 60.6% of the shares of IM Trust S.A. Corredores de Bolsa, an investment bank in Santiago, Chile. In November 2012 and June 2013 respectively, IM Trust and Correval were transferred to Credicorp Capital Ltd. (subsidiary chartered in Bermuda to engage in investment banking activities in Chile, Colombia and Peru); this had no impact on Credicorp’s financial statements. To conduct investment banking operations in Peru, Credicorp Capital Peru S.A.A. was chartered in Peru in April 2012 through a spin-off of a block of BCP’s assets. The assets that

 

were transferred include Credibolsa, Credititulos, Credifondo and BCP’s investment banking activities. The spin-off of this block of assets had no impact on Credicorp’s consolidated financial statements. In addition, in 2014, through Financiera Edyficar (a subsidiary of Banco de Crédito del Peru), Credicorp acquired a majority stake of Mibanco’s shares. In November 2015, the 85.50% share that Grupo Crédito held in Credicorp Capital Peru S.A.A. was spun off and placed in Credicorp Capital Holding Peru, a subsidiary of Credicorp Capital Ltd. This act concluded the company’s reorganization process, whose purpose was to regroup the subsidiaries and shareholdings of Credicorp Capital Ltd. to improve business management. The split-off of this equity had no impact on Credicorp’s consolidated financial statement.

 

At the beginning of 2016, BCP Bolivia ceased to exist as a subsidiary of BCP and became a subsidiary of the holding known as Inversiones Credicorp Bolivia S.A. (ICBSA), which is in turn a direct subsidiary of the Grupo Crédito. In May and August 2016, Credicorp Capital Ltd., through Credicorp Capital Holding Chile, acquired 39.4% of the shares of Inversiones IMT S.A., becoming the owner of 100% of total shares in the company. Between May and September 2016, Credicorp Capital Ltd., through Credicorp Holding Colombia S.A.S., acquired 49% of the shares of Credicorp Capital Colombia S.A., achieving a 100% stake in the organization.

 

In January 2017, May 2018 and May 2019, as part of the reorganization of subsidiaries, Grupo Crédito purchased 9%, 2.77% and 0.96% of BCP’s shares respectively from Credicorp Ltd. By December 2019, Grupo Crédito possessed 97.71% of BCP and Credicorp Ltd. ceased to hold direct shares in BCP.

 

In January 2019, 91.36% of the Compania Incubadora de Soluciones Moviles S.A. – Culqi was acquired and Tenpo S.P.A (formerly Krealo S.P.A) was chartered. In March 2019, Credicorp Capital Negocios Digitales S.A.S. was chartered; in July, 100% of Tenpo Technologies S.P.A. (formerly Tenpo SPA) and 100% of Tenpo Prepago (formerly Multicaja Prepago S.A.) were acquired; in September, 85% of Fondo de Inversion Independencia II was acquired; and in November, 100% of Ultraserfinco S.A. was acquired. Finally, in December, 77.46% of Banco Compartir S.A was acquired.

 

In June 2020, the merger by absorption between Credicorp Capital Colombia S.A. and Ultraserfinco S.A. was carried out; the latter being extinguished. Likewise, in October 2020, the merger by absorption between Banco Compartir S.A and Edyficar S.A.S. was carried out and formed Mibanco - Banco de la Microempresa de Colombia S.A.

 

On January 2, 2021, Ultralat Capital Market Inc. and Credicorp Capital Securities Inc. merged into a single entity. The new company operates under the corporate name of “Credicorp Capital LLC.”, which was authorized on February 2, 2021.

 

On August 2, 2021, the merger by absorption between Atlantic Security Bank and ASB Bank Corp. was approved and registered in the Public Registry of Panama, leaving ASB Bank Corp as the surviving entity. In addition, ASB Bank Corp owns a 100% stake in Laurentian Corporate Service Ltd. since the merger with Atlantic Security Bank.

 

Credicorp’s subsidiaries are organized into four lines of business (LoBs):

 

-

Universal Banking, which includes Banco de Crédito del Peru and Banco de Crédito de Bolivia.

-

Microfinance, which includes Mibanco and Mibanco Colombia.

-

Insurance and Pension, which includes Grupo Pacífico and Prima AFP.

-

Investment Banking and Wealth Management, which includes Credicorp Capital and ASB Bank Corp (formerly Atlantic Security Bank).

 

These LoBs are complemented by Krealo, Credicorp’s corporate arm for venture capital investments. Krealo identifies and invests in opportunities that complement Credicorp’s lines of business.

 

Credicorp’s Organizational Chart

 

The chart below depicts Credicorp’s configuration: 

  

 

* Percentage of participation of the controlling majority shareholder. 

(1) Grupo Crédito has a 33.66% stake. 

(2) Credicorp Capital Ltd. has a 12.795% interest. 

(3) Processing Solutions S.A. (Peru) and Inversiones 2020 participate in 2.0% each. 

(4) Pacífico Seguros is the controlling entity. Inversiones Credicorp, Bolivia S.A has a 51.95% interest. 

(5) Pacífico Seguros is the controlling entity. Inversiones Credicorp, Bolivia S.A has a 51.87% interest. 

(6) Credit Group S.A. participates in 6.49%. 

(7) Ultralat Capital Market Inc. and Credicorp Capital Securities Inc. merged on January 2, 2021. Also, formally its new name “Credicorp Capital, LLC.” It was authorized on February 2, 2021. 

(8) Atlantic Security Bank and ASB Bank Corp. Merged on August 2, 2021, leaving the latter as the existing company. Said merger was authorized on August 2, 2021. 

(9) CC Asset Management Mexico S.A., was incorporated in Mexico on March 15, 2022.

 

 

 

* Percentage of participation of the direct majority shareholder. 

(1) BCP participates in 1.77% and Credicorp Ltd. participates in 0.08%. 

(2) Credit Group S.A. participates in 4.99%. 

(3) Tenpo Technologies SpA participates in 0.10%. 

(4) BCP participates in 0.07%. 

(5) Credicorp Ltd. participates in 4.01%. Inversiones 2020, Mibanco S.A and SEAH participate in 0.03%, each one. 

(6) Independencia Asesores S.G.F.I. S.A. participates with 15.00%. 

(7) BCP and Grupo Crédito S.A. They are the only associates of "Patronato BCP", a non-profit civil association. 

(8) Credicorp Peru S.A.C. participates in 2.72%. 

(9) Investments 2020 participates in 0.10%

Capital and Main Shareholders

 

Capital issued by Credicorp Ltd. amounts to US$ 471,911,585 and is represented by 94,382,317 shares with a nominal value of US$ 5.00 each.

 

All of Credicorp’s issued shares are common and equal, and shareholders have the same rights conferred by Bermuda Law and Credicorp’s Bylaws, which are detailed in the Shareholder’s Guide.

 

Shareholder Structure (%)¹

 

 

 

 

Source: Share Registry

 

The table below shows the composition of shares with voting rights as of December 31, 2022, considering the percentage of share ownership relative to the total number of shares:

 

Percentage of ownership	Number of Shareholders	Share Percentage
Less than 1%	5,581	5.72%
Between 1% - 4.9%	1	4.89%
Between 5% - 9.9%	1	5.89%
Greater than 10%	1	15.49%
N.D.3	N.D.	68.01%

 

 

 

¹ Shares are calculated including those declared by shareholders in their Form 13G filed as of February 15, 2023.

² Includes shares that are directly or indirectly held by the Romero family or by companies that they own or represent.

³ 68.01% of Credicorp’s shares correspond to holdings whose purchase or sale was conducted through the NYSE, where it is not possible to identify the final beneficiary due to NYSE’s rules of disclosure.

 

Market Dynamics

 

The financial markets registered a downward trend in the first half of 2022, due primarily to interruptions in the global supply chain due to the Russia-Ukraine war. This situation spurred inflationary pressures across the globe and led many Central Banks to adopt contractionary monetary policies, which fueled the market’s concerns that widespread recession was on the horizon. Despite this rough start, the measures applied by the central banks early on helped allay fears and the impact of inflation and laid the bases for a rebound in the international securities market in the second half of the year, which partially offset the negative results posted earlier in 2022. The S&P 500¹, Euro Stoxx 50² and the SSEC³ closed 2022 with drops of -19.44%, -16.98% and -21.80% with regard to 2021.

 

On the local front, the Lima Stock Exchange reported growth of 6.10% in 2022 in a context marked by political instability, rising inflation and the counter-cyclical measures adopted by the Central Reserve Bank of Peru.

 

Share Price

 

In 2022, inflationary pressures and political uncertainty negatively impacted Peru’s performance and economic expectations. Despite this scenario, Credicorp remained resilient and obtained good results throughout the year. Credicorp’s share price closed the year at de US$ 135.66, which represented an increase of 11.1% with regard to 2021. The maximum price reached US$177.92 and the minimum, US$115.03 over the period.

 

Source: Bloomberg.

 

 

1

The S&P 500 is a stock index that follows the performance of shares of 500 leading companies that list on US stock exchanges.

2

The Euro Stoxx 50 is a stock index that follows the performance of the shares of the largest 50 companies in the Eurozone.

3

The SSEC is a stock index that is comprised of all Type A and Type B shares that are listed on the Shanghai Stock Exchange.

Market Capitalization and Liquidity

 

At the end of 2022, Credicorp’s market capitalization was situated at US$ 10,789 million. This represents an increase of 11.16% over the figure of US$ 9,707 million registered at the end of 2021. Credicorp’s daily trading volume was 409,622 shares in 2022, which reflects a 21% decrease with regard to the average posted last year.

 

 

* Figures differ from previously reported due to retroactive changes in the calculations of the number of outstanding shares given the incorporation of stock awards

Source: Bloomberg.

 

 

Dividends

 

In accordance with our dividend policy, and aligned with prudent capital management, Credicorp Ltd.s’ Board, in its session on April 28, 2022, announced the distribution of dividends equivalent to S/ 15 per share. It is important to note that Credicorp makes every effort to compensate our shareholders’ investments within a framework defined by our obligations, results, plans and stakeholders’ expectations.

 

 

(1) Dividends of 2019, 2020 and 2021 have been converted to US$ using the accounting exchange rate at the end of 02/27/2020, 05/10/2021 and 06/08/2022, respectively. 

(2) In 2018, an ordinary dividend (S/20.0000) and a special dividend (S/8.0000) were paid, which were converted into dollars at the accounting exchange rate at the close of 05/08/2019 and 11/20/2019, respectively.

 

Chapter 2

 

Our businesses in 2022 

 

GRI 2-6

 

Credicorp is a financial holding and is organized into 4 lines of business. We have differentiated strategies for our subsidiaries.

 

1.

Universal Banking

 

Banco de Crédito BCP – The N°1 bank for loans and deposits in Peru

 

BCP is an institution in the Peruvian financial system and provider of financial services. This bank engages in commercial banking activities through its Wholesale Banking division, which provides specially designed services for corporate clients and large companies, and its Retail Banking division, which serves small and medium companies as well as individuals. BCP provides financing and savings solutions.

 

●

Leader in loans and deposits in Peru. MS1 of 29.9% and 32.2% respectively

●

Loans for S/ 123,708 million and Government Programs for S/ 8,557 million

 

BCP’s purpose is to “Transform plans into reality.” The bank has two north stars that guide its journey: (i) to be the number 1 bank in client experience and i) have the best efficiency ratio in Latin America.

 

At BCP, we work to develop internal capacities, which we denominate enablers, to ensure that we stay on track. These enablers are: (i) Information Technology, (ii) Data and Analytics, (iii) Cybersecurity. On the Information Technology Front, in 2022 we continued to transform our infrastructure through APIs to obtain greater efficiency and flexibility. We prioritized our operational stability to handle growth in digital transactions. Additionally, we achieved record-high uptimes that were comparable to those of first tier banks. On the Data and Analytics front, our Data Lake has more than 28 thousand variables and covered 77% of the economically active population. We leveraged this data to build risk models and develop personalized solutions. Finally, on the cybersecurity front, we launched mass campaigns to train our employees and are equipped with cutting-edge technological solutions that protect us against phishing, malware, data leaks, etc.

 

●

In 2022, our digital sales accounted for 61% of total units sold through retail banking and 66% of the monetary transactions were made through digital channels. At year-end, 67% our clients in Personal Banking were classified as digital2.

 

¹ Market share within the entire Financial System (includes Multiple Banking, financial companies, municipal savings banks, rural savings banks, and credit companies)

² Digital clients are retail customers who meet at least one of three conditions: (i) conduct at least 50% of their monetary transactions through digital channels, (ii) conduct at least 50% of their non-monetary transactions through digital channels, or (iii) purchased products digitally in the last 12 months. 

Banco de Crédito de Bolivia – Top 6 in loans and deposits in the Bolivian Financial System

 

Banco de Crédito de Bolivia is a universal bank that is solidly positioned at the national level. It has an extensive network of service and sales channels (more than 1,300 points of service). The bank is focused on on-going innovation and seeks to position itself as the clients’ first option in the Bolivian financial system.

 

●

Loans totaled S/ 9,254 million with an MS of 8.3% deposits totaled S/10,986 million with an MS of 8.2% in Bolivia

●

More than 400 thousand active users of the Soli application

 

2.

Microfinance

 

Mibanco – Leader in Microfinance in Latin America and the second most relevant player in the world

 

Mibanco is an entity in the Peruvian Financial System that serves micro and small businesses. It has the largest network for service in this segment and serves clients through Internet Banking, App Mibanco, telephone banking, correspondent agents and BCP ATMs.

 

●

Regional leader in microfinance with 21.5% of MS in Peru in terms of loans

●

Loans for S/ 14,089 million, of which S/ 954 million were Government Program loans

 

Mibanco’s purpose is to “Transform people’s lives armed with a commitment to financial inclusion and progress as we contribute to the country’s growth.” To fulfill this purpose, the bank seeks to improve productivity, experience and growth.

 

To advance on these fronts, the bank leverages 3 enablers: (i) centralized intelligence, (ii) alternative channels (iii) excellence in commercial execution. On the centralized intelligence front, the percentage of disbursements associated with commercial offers generated by our centralized intelligence engine rose to 75.8% in 2022 (versus 67.5% in 2021 and 53.4% in 2020). On the alternative channel front, our disbursement volume stood at 14.9% in 2022 (versus 8.6% in 2021 and 5.6% in 2020). Finally, our relationship managers’ focus on excellence is reflected in the resilience of the volumes disbursed through traditional channels, where disbursements hit an all-time high in 2022 despite a drop in the number of relationship managers and a context marred by social protests.

 

Thanks to the advances generated by these enablers, in 2022 we achieved a substantive improvement in our efficiency ratio, which stood at 51.3% (-410bps). Finally, the number of people financially included by Mibanco in 2022 totaled 72 thousand.

 

3.

Insurance and Pensions

 

Grupo Pacífico – Top 2 in net earned premiums in the Peruvian insurance market

 

Grupo Pacífico is a leading institution in the Peruvian insurance system. The company has two businesses to attend to different fronts of its market: Life and P&C. In 2015, Grupo Pacífico entered into a joint venture with Banmédica to participate as equal partners in the health insurance and medical service lines. This venture covers private health insurance (Medical Assistance), which is managed by Pacífico Seguros (and reported within the P&C business), corporate health insurance for employees (EPS insurance) and medical service subsidiaries (clinics, laboratories,

oncological centers). Under this alliance, Grupo Pacífico transferred control of EPS insurance and of the medical service subsidiaries to Banmédica. Consequently, the EPS and medical services lines are not consolidated within Grupo Pacífico for accounting purposes and are reported as an investment in associates.

 

●

2nd in net earned premiums with S/ 2,881 million in the Peruvian insurance market.

 

Pacífico Seguro’s purpose is to “Protect people’s happiness.” The insurer has three north stars, which guide its journey. These are: (i) Increasing our sales so that clients can be protected; this entails developing new products and own channels and leveraging the power of Credicorp’s channels, (ii) Achieving the highest NPS in the market by surprising our clients with an extraordinary experience and placing them at the center of everything we do, and (iii) Continuing as market leader for efficiency to offer the best protection to our clients through the value that we create for our stakeholders.

 

At Pacífico Seguros, we work to develop our internal capacities, which we denominate enablers, to ensure we follow our north stars. These enablers are: (i) Agility and (ii) Data Analytics. On the Agility front, we have completed our “Agile at Scale” and 36% of our employees work through our agile operating model. On the Data Analysis front, we have begun implementing our Target Operating Model to ensure that analytics efforts are developed jointly with our commercial teams.

 

Thanks to our transformation initiatives, premiums generated through digital channels rose 56% compared to 2021. Additionally, our application Mi Espacio Pacífico reported 56% growth in the number of users.

 

Prima AFP – Second most important actor in the Pension business in Peru

 

This company is a private pension fund manager, which was chartered in 2005. It ranks 2nd place in funds under management with a total of S/ 31,850 million and an MS of 30.1%. Prima AFP’s purpose is to “Guide and accompany people in their progress.”

 

4.

Investment Banking and Wealth Management

 

Credicorp Capital

 

Credicorp Capital aspires to be the financial advisory and services company of choice in the region and seeks to employ the best talent. The company conducts operations in Peru, Colombia, Chile and the United States through five business units: (i) Asset Management, (ii) Capital Markets, (iii) Corporate Finance, (iv) Wealth Management and (v) Fiduciary Businesses.

 

ASB Bank Corp

 

ASB is our banking platform in Panama. Its balance backs Credicorp Capital’s Wealth Manager and Corporate Finance businesses. ASB also acts as a platform for some of strategies of the trading business in the Capital Markets.

 

In the Investment Banking and Wealth Management business, we are in the final stage of a comprehensive review of our strategy. We seek to focus on developing businesses that provide growth opportunities in the current regional context.

 

●

Assets under management for more than S/ 124 billion (includes ASB and Credicorp Capital)

 

Chapter 3

 

Economic Environment 

 

A. Growth

  

 

 

Source: INEI, BCRP.

 

In 2022, GDP rose around 2.7%. Private consumption increased 4.4%¹, sustained by the normalization in household expenses after the pandemic; a recovery in employment; and withdrawals from Severance Indemnity Accounts (CTS) and Pension Funds. Private investment remained at similar levels compared to last year. At the sectorial level, the most dynamic sectors were services (3.4%), commercial (3.3%) and non-primary manufacturing (2.3%), which reflects an expansion in private consumption and a return to pre-pandemic activity levels. Nevertheless, the primary sectors fell around 0.5%, driven by a contraction in mining (-0.2%), primary manufacturing (-2.9%) and fishing (-13.7%).

 

¹ Estimate 

B. Inflation

 

 

 

Source: INEI.

 

Interannual inflation stood at 8.5% in 2022, which represented a record high for the past 26 years. This was driven by higher international oil prices (WTI average 2022: +39% vs 2021) and agricultural commodities (wheat +28% and corn: +19%), accompanied by interruptions in the global supply chains, which led to product scarcity and delays in deliveries, which impacted negatively goods prices. In this context, inflation stood above BCRP’s target range of 1% to 3% for second consecutive year. Core inflation, which excludes food and energy, stood at 5.6% at the end of 2022, close to its maximum reported for last 22 years.

 

C. Reference Rate

 

 

 

Source: BCRP.

 

BCRP’s reference rate rose from 2.50% at the end of 2021 to 7.50% at the end of 2022 and reached a historic high. During the first eight months of the year, the regulatory entity raised its rate 50 bps per month until September, the rest of the year the monthly raise fell to 25 pbs.

 

Rising reference rates are currently a global phenomenon, affecting both developed and emerging countries. The objective of Central Banks is to anchor future inflation expectations in a context marked by observed inflation rates that are the highest in decades and well above the targets set by these monetary entities.

 

D. Public finance and the external sector

 

 

 

Source: BCRP.

 

The fiscal deficit in 2022 stood at 1.6% of GDP versus 2.5 % of GDP at the end of 2021. This reduction was attributable, to a large extent, to the fact that fiscal income was up (12.7%) while current expenditures were down (0.9%), which reflected a drop in COVID-related expenditures. Over the same period, expenses in gross capital formation, related to public investments, grew 19.1%.

 

Public debt represented 34.4% of GDP at the end of 3Q22, versus 35.9% at the end of 2021. In terms of the country’s credit rating, in October 2022, Fitch Rating¹ revised Peru’s outlook downward from stable to negative but maintained the country’s BBB rating as a foreign currency issuer. In December 2022, S&P² followed suit and reduced Peru’s outlook from stable to negative but maintained its long-term foreign currency rating at BBB. At year-end, a context marked but stagnation on the political front and elevated tensions between the Executive Branch threatened to weaken the government’s capacity to implement timely policies.

 

The current account deficit is expected to stand at 5.0% of GDP in 2022 versus 2.3% of GDP at the end of 2021. Growth in this line is primarily attributable to a reduction in the trade surplus, which fell from USD 14.8 billion in 2021 to USD 9.5 mil million in 2022 (imports rose 16.4% due to an uptick in prices for oil and agricultural products while exports rose 4.1% during this period). The increase registered for the current account deficit was primarily attributable to growth in the service balance deficit, which was driven by high international shipping costs; an uptick in Peruvian residents’ trips abroad; and the fact that international tourism to the country remained below pre-COVID levels.

E. Exchange rate

 

 

 

Source: BCRP.

 

The exchange rate stood at S/ 3.81 at the end of 2022, which reflected appreciation of 4.1% with regard to the print at the end of 2021. Among Latam’s currencies, the Sol appreciated the most against the dollar, followed by the Brazilian real and Mexican peso, which appreciated 5.1% and 5.0% respectively. The Chilean peso remained stable (0.1%) over the same period while the Colombian peso fell almost 20%. These variations took place in a year in which the US Dollar hit its highest level in two decades, driven by Fed’s upward interest rate cycle.

 

Throughout the year, the Peruvian sol fluctuated between a low of 3.63 at the beginning of April and a high of 4.00 at the end of October. A historic high of 4.14 was reached in October 2021. Political events in December 2022 (the coup attempt by Pedro Castillo, his subsequent impeachment by Congress and the swearing in of Dina Boluarte as the new president of Peru) had a limited impact on the exchange rate.

 

In 2022, BCRP made spot sales for US$ 1.2 mil million; intervention was concentrated in the first half of the year. This contrasts with the record sales reported in 2021 of US$ 11.6 billion. BCRP’s stock of FX swaps remained relatively stable and closed the year at S/ 38.1 billion (S/ 37.8 billion in 2021).

 

Finally, net international reserves closed 2022 at US$ 71,883 million versus US$ 78,495 million in 2021, which represented 30% of GDP.

 

The exchange rate stood at S/ 3.81 per US Dollar at the end of 2022 and reached a record high of S/ 4.00 in October.

 

1 For more information, see the respective 6K filing.  

2 For more information, see the respective 6K filing.  

Chapter 4

 

Economic and Financial Performance 

 

Material Topic: Economic and Financial Performance 

GRI 3-3, 201-1 

SASB FN-CB-000-B, FN-CB-410-a.1 

Pillar 1

 

Business sustainability at Credicorp depends, to a large extent, on the positive impacts that our companies generate for stakeholders and society over time. Credicorp’s LOBs are key drivers in the markets in which they participate, and the organization plays a fundamental role in adequately transferring, for example, resources generated by savings accounts to financing and investment efforts, which in turn generate value for society and promote economic development. On the insurance and pension fronts, we work to ensure our clients’ wellbeing today and down the line with products that protect and grow their assets.

 

In the material analysis performed, Economic and Financial Performance were ranked among the primary material issues for both Credicorp and its stakeholders. Given the relevance of this issue, the following chapter provides details on the holding’s financial evolution and the economic contribution that the Group generates, whose benefits are transferred to society through multiple venues.

 

Economic Value Generated and Distributed

 

Credicorp generates economic value through its operations, financial income and other income, which are distributed among different stakeholders and the society. In 2022, the economic value generated was S/ 20,120 million, which represents 20% more than in 2021. This value is distributed as follows:

 

 

 

Finally, the economic value retained by Credicorp amounted to S/ 4,243 million at the end of 2022.

Financial Performance - Despite an adverse environment, we closed 2022 with solid results

 

Net income (attributable to Credicorp)		NPL Ratio		Cost of Risk
S/ 4,633.1 million (vs S/ 3,584.6 million in 2021)		5.4% (vs 5.0% in 2021)		1.22% (vs 0.82% in 2021)

 

In 2022, Credicorp registered net income of S/4,633.1 million, which translated into an ROE and ROA of 16.7% and 1.95, respectively. These results reflected the fact that the company has absorbed the negative impacts generated by the pandemic. The year 2022 was turbulent and the environment was adverse on the political, social and economic fronts. Nonetheless, Credicorp’s adequate liquidity and capitalization, coupled with prudent risk management and good portfolio quality, positioned the company to weather the storm and emerge stronger, with resources and capacities intact to continue strengthening our strategy and advancing different initiatives.

 

Higher net earnings were primarily attributable to growth in net interest income, which rose 23.1% in a context of rising interest rates. The recovery of our insurance underwriting result also contributed as it returned to positive terrain this year, in line with the normalization in claims levels post-pandemic. These dynamics were partially offset by growth in operating expenses and in provisions for loan losses, net recoveries.

 

 

Assets and Loans: The loan portfolio evolved positively in a context of economic reactivation

 

 

 

At the end of 2022, Credicorp’s assets reported a drop of 3.3% with regard to the figure at the end of 2021. This evolution was driven by a decline in interest-bearing Due from Banks (depicted in the figure under “Other interest earning assets”) and a decrease in Investments. These dynamics respond to a drop in liquidity across the financial system due to amortizations of loans granted during the pandemic under the Government Programs (“GP”) Reactiva Peru and FAE-Mype. It is important to note that the Loan balance grew 0.7%, which led to an increase in the share of loans in Total Assets, which rose from 60.3% to 62.8%. The aforementioned dynamics, coupled with a contraction in the Peruvian Government Program Loans (GP) balances, led the composition of Interest Earning Assets (IEA) to tilt favorably toward higher yields.

 

Loans
Total loans in quarter-end balances rose 0.7% with regard to 2021 while structural loans¹ increased 7.9%. This growth was partially offset by the evolution of the exchange rate. If we exclude this effect, total loans rose 2.3% and structural loans, 9.7%.

 

¹ Excludes from total loans the loans granted to clients through the Government Programs Reactiva Peru y FAE-Mype. 

The positive evolution of structural loans was in line with post-pandemic economic recovery across portfolios and in Retail Banking and Microfinance in particular. Loans granted under GP registered a 49.1% reduction in their balances to represent only 6.4% of total loans at the end of the period (vs. 12.6% at the end of 2021).

 

 

Investment Portfolio

Total investments fell 7.2% in 2022 after certificates of deposit matured and were not renewed to offset the drop registered in liquid resources. Lower liquidity levels were seen across the system, and reflected the fact that clients used resources to amortize their GP loans.

 

Other Interest-Earning Assets 

Other interest-earning assets fell 18.2% in 2022, which was driven primarily by the evolution of Due from Banks which fell 17.0% over the year. This evolution was in turn spurred by a drop in the financial system’s liquidity, which reflected clients’ decisions to utilize resources to amortize GP loans and the fact that BCRP instituted a contractionary monetary policy to contain inflation pressures.

Competitive Funding Structure

 

In 2022, total funding at Credicorp fell 5.3%. This decline was driven mainly by a contraction in BCRP instruments (-42.6%), which reflects amortization of GP loans. The drop in demand deposits (-17.3%) and savings deposits (-3.8%) also contributed to this evolution. It is important to note that a significant portion of funds migrated from low-cost deposits (demand and savings) to time deposits (+33.0%) in a context of rising interest rates. Additionally, Severance Indemnity deposits dropped (4.8%), in line with a loosening of restrictions on withdrawals for this type of account.

 

Due to banks and correspondents rose 23.9%, mainly through BCP Stand-alone, which took a Club Deal for US$ 250 million, which led the level of Due to foreign financial institutions to rise. Due to banks and correspondents at Mibanco also contributed to this dynamic. Finally, Bonds and Issued Notes fell 0.4%.

 

In this context, Credicorp’s cost of funding rose 1.83% in 2022, which represented an increase of 54bps with regard to last year. This evolution reflected rising interest rates and fund migration from low-cost deposits to time deposits. The fact that the company has a broad base for transactional deposits (demand, savings), allowed us to offset the increase in the cost of funding in a rising interest rate environment.

 

 

NIM grew due to our effective management of pricing in a context of rising rates. The shift to a higher-yield asset structure and a competitive funding structure contributed to improving this result

 

Net interest income, which is the most important component of income, rose 26.7% in 2022. This growth was driven mainly by the uptick in market rates in 2022, which impacted the yield on IEAs. Additionally, the shift to a higher-yield asset structure, which reflected growth in structural loans, favorably impacted this result.

 

Interest expenses rose 40.2%, driven by growth in market rates, which subsequently impacted the cost of funding. Additionally, fund migration from low-cost deposits to time deposits also drove an uptick in this result.

 

In this context, Net Interest Income (NII) rose 23.1% in 2022. The Net Interest Margin (NIM) stood at 5.07%, which reflects growth of 97 bps with regard to the level registered in 2021. The Risk-Adjusted Net Interest Margin increased 70 bps, rising from 3.57% in 2021 to 4.27% in 2022.

 

 

Cost of Risk on the way to normalizing

 

In 2022, provisions rose 49.4% with regard to last year, which primarily reflects the impact of a particularly low base in 2021.

 

Growth in provisions was primarily driven by Retail Banking at BCP Stand-alone, and by the Consumer and SME-Pyme segments in particular, as well as by Mibanco. In Consumer, the increase in provisions was attributable to the fact the clients’ payment behavior was negatively affected by an increase in inflation throughout the year and to a particularly low comparative base last year. In SME-Pyme, growth in provisions responds to an increase in disbursements to segments with higher risk but also subject to higher interest rates. Finally, the uptick in provisions at Mibanco was triggered by maturities of specific vintages disbursed in the second half of 2022, which generated a negative impact on projected default ratios.

 

In this context, the structural Cost of Risk (CofR) stood at 1.26% (compared to 0.99% in 2021). If we include the effects of Government Program Loans (GP), the CofR stands at 1.22% (compared to 0.82% last year).

 

With regard to delinquency ratios, the structural NPL ratio registered little variation and stood at 4.95%, 9 basis points above the closing print in 2021. This slight increase was primarily attributable to growth in refinanced loans. The NPL ratio for total loans registered an increase of +42 bps (rising from 4.99% to 5.41%). It is important to note that the Government Loan Portfolio is backed by government guarantees. In line with the aforementioned, the coverage ratio for structural NPLS stood at 112% in 2021, versus 132% in 2021. If we include GP loans, the coverage ratio for total NPLs stands at 98% (in comparison to 115% in 2021).

 

 

 

Growth in Other income reflects an uptick in transaction levels

 

In 2022, other income rose 3.6% with regard to 2021. This result was primarily driven by the positive evolution of Fee Income (+4.2%), which was mainly fueled by the banking business via an uptick in transactions. The increase in the Net gain on FX transactions was sizeable (+17.5%) and reflects an upturn in volatility. Other Non-core income fell significantly, primarily due to a drop in gains on speculative derivatives.

 

 

 

 

The Insurance Underwriting Result returned to positive terrain due to improvements in the sanitary situation

 

The insurance underwriting result returned to positive terrain after claims returned to more normal levels in the Life business. Growth in Net earned premiums in both Life and P&C also drove this result. The increase in Net earned premiums in Life was primarily attributable to an uptick in Group Life, D&S and Credit Life while growth in P&C was mainly driven by products in Personal Lines and Medical Assistance. The aforementioned dynamics were partially offset by slight growth in claims in P&C.

 

 

 

Positive evolution of the efficiency ratio, which allows us to step up the pace of investments to bolster our competitiveness

 

Operating income this year rose 15.1%, which was mainly driven by an uptick in Net interest income in a context marked by rising rate and growth in structural loan volumes. Operating expenses rose 11.4%, which was primarily spurred by growth in Administrative and General Expenses (+18.7%) and by an increase in Salaries and Employee benefits (+10.5%). Within Administrative and General Expenses, an uptick was reported for expenses for IT and system outsourcing, in line with the Group’s transformation strategy and disruptive strategy, and for expenses for advertising and fidelity programs.

 

In the aforementioned context, the efficiency ratio improved 150 bps YoY to stand at 44.4% at year-end.

 

 

 

 

Our solid solvency level sustains our strategic initiatives

 

Credicorp’s regulatory capital ratio was 1.35 times higher than the requirement set by the regulatory entity. This level represented a slight drop of 0.18 with regard to 2021. This evolution was driven mainly by growth in regulatory capital requirements in our banking businesses to cover loan growth.

 

The Common Equity Tier 1 (CET1) stood at 12.5% at BCP Stand-alone and at Mibanco, 16.5%.

 

It is important to note that the increase (+68bps) in the CET1 ratio at BCP Stand-alone primarily reflected a 45% growth in accumulated earnings. Finally, the CET1 at Mibanco reported growth of 122 pbs. This reflected an increase in retained earnings, which returned to positive terrain.

 

 

 

 

Chapter 5

 

Risk Management 

 

Material Topic Integral Risk Management, Data Privacy 

GRI 3-3, 418-1 

SASB FN-CB-230-a.2, FN-CB-550-a.2 

Pillars 1 and 2

 

Risk management is of utmost importance to all companies and to the financial industry in particular, where interaction between institutions and other market agents is intense. In this context, systemic risk is high. Financial companies must safeguard the security of their clients and resources by adeptly managing their balances and ensuring that an adequate capital base is in place in case unexpected events arise. Credicorp is equipped with frameworks and processes that implement comprehensive risk management via effective monitoring, assessment, and treatment of its risks and those of its subsidiaries. The Group is aware that risk management plays a key role on multiple fronts, and, similar to other stakeholder groups, listed this issue on the top of its materiality list in 2022. This chapter provides details on our corporate vision, financial risk management, ESG risks and non-financial risks as well as of our management of capital.

 

I. Corporate Vision

 

Corporate Principles

 

Risk management constitutes a fundamental pillar in Credicorp’s strategy to ensure adequate business development. For this purpose, we have defined six corporate principles to guide risk management in the organization:

 

1.

Commitment of executive management

2.

Independence of risk functions

3.

Sufficiency and quality of resources for risk management

4.

Measure of performance based on the risk assumed

5.

Follow-up and validation

6.

Compliance with Credicorp’s Code of Ethics

 

Risk Culture

 

Risk assessment at Credicorp is conducted by specialized personnel with adequate knowledge of processes to identify, assess, measure, treat and control risks. To consolidate a risk culture that is aligned with best practices in the industry, we employ periodic programs and offer ad-hoc courses for different risk teams and the entire organization.

 

In the second half of 2022, the remote model of work, which was prevalent during the pandemic, shifted toward a hybrid model. This new work modality implies latent risks for cybersecurity. As such, and as part of our risk culture, we continue to roll out awareness programs as we prepare Credicorp’s employees to recognize through and follow protocols for response.

 

 

Appetite for Risk

 

Appetite for risk refers to the maximum amount of relevant risk that we are willing to assume and can withstand to achieve our business objectives; this entails establishing the maximum deviations that we consider acceptable.

 

The main objective is to develop a risk profile that reflects the Board’s expectations, which is manifested in six strategic pillars: (i) solvency, (ii) liquidity, (iii) profit and growth, (iv) stability of results, (v) balance sheet structure and (vi) cybersecurity risks. These six pillars are supported by a taxonomy of risk that allows us to monitor our risk profile qualitatively and quantitatively.

 

The appetite for risk is composed of the following elements:

 

●

Statement of the risk appetite: define the general principles and qualitative declarations that guide the group’s risk strategy, which also serves as inputs to define the target risk profile.

●

Metric dashboard: define the levels of risk exposure across our six strategic pillars through several metrics.

●

Limits: seek to ensure that risk-taking is within the tolerance level established across business units’ roles and responsibilities.

 

The appetite for risk is integrated in the processes for strategic and capital guidelines as well as in the process to define the budget. This facilitates strategic decision making throughout the organization.

 

Corporate governance of risk management

 

Credicorp’s Board has the power to make decisions about the overall focus of risk management at Credicorp Ltd., which includes approving its appetite for risk. The board is also informed about the level of compliance with the appetite for risk, levels of risk exposure, and improvements in the comprehensive management of Grupo Crédito S.A. and Credicorp’s other subsidiaries.

 

The Board of Grupo Crédito S.A. has the authority to make decisions applicable to Credicorp’s subsidiaries, including those related to risk management, such as approving the appetite for risk at Credicorp’s subsidiaries.

 

The same individuals sit on the Board (and the Committees) of Credicorp and Grupo Crédito S.A. and the management structure of both companies has been aligned.

 

Credicorp’s Risk Committee

 

This committee represents Credicorp’s Board and proposes levels of appetite for risk for Credicorp Ltd. The committee acknowledge the level of compliance with the appetite for risk and the level of exposure assumed by Grupo Crédito and Credicorp’s subsidiaries and oversees relevant improvements in comprehensive risk management at these entities.

 

 

Grupo Crédito Risk Committee

 

This committee represents Grupo Crédito’s Board in decision-making processes relative to risk management at Grupo Crédito and Credicorp’s subsidiaries. Additionally, the committee presents proposals to the Board of Grupo Crédito to set levels of appetite for risk for the group’s businesses. The Committee defines the strategies that will be used to adequately manage different types of risk; supervise the appetite for risk; and determine the principles, policies, and general limits to which Grupo Credicorp and Credicorp’s subsidiaries will be subject.

 

In addition to efficiently managing all types of risk, the Risk Committee of Grupo Crédito is supported by the following committees, which report changes and relevant concerns regarding risk management on a periodic basis:

 

●

Credit Committee

●

Country Risk Committee

●

Corporate Wholesale Risk Committee

●

Corporate Retail Risk Committee

●

Operating Risk Methodology Committee

●

Corporate Risk Model Committee

●

Corporate Committee for Market, Structural, Trading and Liquidity Risk

 

Central Division for Risk Management at Credicorp

 

The Central Division for Risk Management at Credicorp (led by the Chief Risk Officer at Credicorp) informs the Risk Committee at Credicorp about the level of compliance with the appetite for risk and regarding the level of exposure assumed by Grupo Crédito and Credicorp’s subsidiaries. This division inform the relevant improvements related to the integral risk management of Grupo Crédito and Credicorp’s subsidiaries. It also proposes levels of appetite for risk for Credicorp Ltd.

 

Central Division for Risk Management at Grupo Crédito

 

The Central Division for Risk Management at Grupo Crédito (led by the Chief Risk Officer at Grupo Crédito) is responsible for implementing the policies, procedures, methodologies and actions used to identify, measure, monitor, mitigate, report and control the different risks to which the Grupo Crédito and Credicorp’s subsidiaries are exposed. The division is also responsible for participating in efforts to design strategic plans for the business units to ensure that they are aligned with the risk parameters approved by Grupo Crédito’s Board. The division disseminates the importance of adequate risk management and defines the role each of the units must play in identifying risk in a timely manner and in determining actions to be taken.

 

Corporate Policies

 

Corporate policies for risk management determine the roles and responsibilities for managing our main risks. We have a framework policy that guides this management and also have specific policies for the most relevant risks. It is important to note that each company in the Group possesses particular characteristics (such as size and the complexity of their operations), which are taken into consideration when each policy is developed and implemented.

 

 

Corporate Programs

 

In 2022, we continued work to launch the corporate program Credicorp Way 2.0, whose objective is to strengthen corporate governance of risk at all of the Group’s companies. This year, the following achievements were noteworthy:

 

Risk OKRs were set for the corporation. These OKRs have been launched, managed and updated according to the governance scheme established and approved in the respective instances. This has helped align and focus the corporation’s main priorities and creates a better match between the incentives provided to Credicorp’s management and the corporation’s objectives and appetite for risk.

 

The corporate governance scheme was strengthened at all of the Group’s companies and at different levels, (a) at the corporate level, corporate committees were complemented with the creation of a Corporate Committee for Market, Structural, Trading and Liquidity Risk (b) at the subsidiary level, each company implemented specialized tactical committees that specialize in credit risk, model risk and technological risk, and (c) at the operating level, monthly follow-up meetings were implemented with each of the Group’s companies to review the situation and plans of action for the different risks managed.

 

We complete the corporation’s scheme for risk appetite management with the incorporation of Krealo’s appetite dashboard and a governance scheme approved by Grupo Crédito Risk Committee.

 

Over the last two years, a high level of alignment, management and follow-up of the corporation’s main risks has been achieved. Additionally, Credicorp has aligned all of its companies with its standards and developed a fluid exchange of best practices and lessons learned that contribute to improving the Group’s risk management.

 

 

II. Financial Risks

 

Credit Risk

 

Loans, provisions and coverage

 

Credit risk is the most significant risk for our activities and is defined as the probability of suffering losses due to debt repayment problems relative to borrowers or to counterparties in exposures assumed off and on the balance sheets.

 

At the end of December 2022, the balance of direct and indirect loans was S/168,118 million¹, which represented decrease of 0.7% with regard to the level reported in December 2021. Provisions for loan losses² totaled S/8,531 million. In this context, at the end of December 2022, the coverage ratio³ was situated at 5.07%, versus 5.36 % at the end of December 2021.

 

Loans, provisions and the Credicorp’s coverage ratio by subsidiary

 

Company	Direct and Indirect Loans		Provisions		Coverage Ratio
	2021	2022	2021	2022	2021	2022
BCP and branches	141,353	140,215	7,345	7,026	5.20%	5.01%
Mibanco	13,422	13,966	1,146	998	8.54%	7.15%
BCP Bolivia	10,792	10,274	477	433	4.42%	4.21%
ASB	2,589	2,362	0	0	0.00%	0.00%
Mibanco Colombia	1,059	1,205	91	66	8.59%	5.48%
Other	116	96	12	8	10.34%	8.33%
Total	169,331	168,118	9,071	8,531	5.36%	5.07%
Figures in S/ millions.
Source: Corporate Accounting.

 

 

¹ Direct and indirect loans include contingent accounts for guarantees, performance bonds and letters of credit. This does not include accrued interest.

² Provisions are calculated under IFRS 9 and include provisions for contingent accounts for guarantees, performance bonds and letters of credit. 

³ The coverage ratio is equal to the provisions divided by direct and indirect loans.

 

 

Credit Process

 

A)    Wholesale Banking

 

Underwriting:

 

The Group has policies to approve transactions that are subject to credit risk. These policies are based on conservative criteria, which are applied to common structures in each of the Group’s companies. Analysis focuses primarily on the client’s capacity to generate sufficient resources to reimburse the company, within the time frames stipulated in agreements, for the principal of the loan and its respective interest.

 

Risk assessments are conducted periodically at the client or economic group levels. In particular, we analyze the client’s financial situation and payment capacity. Assessments are supported by standardized processes, which are in turn supported by rating models that calculate the probabilities of default to be used to approve credit lines and control portfolio quality.

 

In 2022, Credicorp began a project to renew the technology utilized in its credit process and replaced the tools it had been using for credit assessment and approval. Thanks to the functional improvements generated by this project, the process to assess the financial situation of clients will make the service flow more efficient and improve risk analysis.

 

A process to build a Dashboard of Guarantees was launched this year, which will provide a series of indicators to improve monitoring of the guarantees that back our loans. This helps ensure that we follow the guidelines that govern risk metrics, process efficiency and client experience.

 

Follow-up:

 

The Group has implemented a follow-up process to maintain the portfolio’s quality. Levels of credit deterioration are assigned through this process and specific corrective actions are taken for each case.

 

To maintain an adequate level of portfolio risk, we identify client risk in a timely manner by using a system of preventive alerts, which assign levels of deterioration and implement corrective actions on a case-by-case basis.

 

In 2022, Credicorp monitored and updated the risk level of economic sectors and clients that are potentially impacted by i) the conflict between Russia and the Ukraine, ii) the economic juncture in Peru and in the other countries in which we operate (complications with the supply chain, delays, less availability of and increases in the prices of imported goods, inflation, others), and iii) rising interest rates. As a complement to the current system of alerts, at the end of 2022, we finalized work to develop the anticipated alert model, whose objective is to anticipate deterioration of clients by 6 to 9 months. This model prioritizes transactional information and will be launched in 2023.

 

Monitoring reports on portfolios are conducted every quarter to give management and governance bodies an updated view of the risk of each portfolio.

 

 

Recovery:

 

The main objective of the recovery process is to normalize clients’ situations. If this is not possible, we opt to maximize debt recovery. Along these lines, we have worked on improving processes to provide more personalized services to our clients.

 

To meet our objective, the companies in the Group restructure the payment conditions for clients that are experiencing economic deterioration. Additionally, legal processes are executed to recover guarantees and processes to recover overdue loans or negotiations to execute the sale of corresponding guarantees or dations in payment. In 2022, we improved our processes to efficiently manage delinquent loans backed by state guarantees under the government programs.

 

B)    Retail Banking

 

Underwriting:

 

The processes for acceptance and portfolio management of the main portfolios are conducted with scoring and rating models, whose probabilities of default are used for loan assessment. These acceptance models, coupled with norms for loan issuance, are defined by the risk units in accordance with the guidelines approved by the different risk committees of the Group’s companies.

 

In 2022, improvements were made to underwriting scoring models to reflect variations in risk post-pandemic. Through on-going follow-up of payment behavior models, the Group found that the adjustments made to the model at the height of COVID in 2020 were no longer necessary, and as such, were subsequently deactivated. Efforts were made to make our acceptance scores more robust and calibrations relative to the impact of early delinquency were incorporated, which were identified through (i) an increase in the size of the data universe and (ii) incorporation of macroeconomic variables such as inflation.

 

Follow-up:

 

We continue to use behavioral models in the Group, which allow us to group clients by levels of risk. Based on the risks found, preventive and corrective actions are executed. Additionally, we conduct follow-up on the portfolio through delinquency indicators for the portfolio, origination, profitability and expected loss.

 

In 2022, we continue work to make our behavior scores more robust. These tools have allowed the Group to (i) identify early alerts, (ii) understand the profile of vulnerable sub-segments or of those that may begin to show signs of vulnerability and (iii) manage actions for pre-delinquency. Follow-up schemes have facilitated the timely assessment of the performance of our models and provided a basis to make adjustments that reflect behavior in different tranches of delinquency, including early delinquency by key product and segment. Additionally, adjustments were made to models for inflation to prudently address price volatility.

 

The risk strategy during the final leg of the pandemic has allowed us to manage the portfolio by mitigating delinquency levels through a more extensive, exhaustive and robust vision.

 

  

Recovery:

 

In 2022, the Group fine-tuned the alignment between its Risk Management, Retail Banking Risk and Payment Solutions teams. This dynamic has allowed Credicorp to respond quickly and propose comprehensive plans for action: we recognize risk, adjust guidelines and set differentiated strategies into motion for portfolios showing distress.

 

Credicorp has increased recovery levels thanks to the implementation of best practices in all stages of delinquency while focusing on client and employee experiences.

 

The objective is to engage in pre-delinquency monitoring and preventive intelligence, which helps prioritize clients that are facing more distress and improves efficiency.

 

Models and methodologies for credit risk management

 

Statistical models constitute a fundamental part of our credit risk management strategy. As such, the Models and Methodologies Area for Risk Management (MMGR) at BCP provides support to build, adjust and/or calibrate models to manage our companies’ credit risks. This area is in charge of providing governance guidelines for credit risk models and overseeing their correct application within the group.

 

In 2022, with the results of on-going modeling of models, calibration was conducted with early metrics of payment behavior. In parallel, at the portfolio level, the assumptions introduced during the pandemic were discarded and the Group returned to analytical normality. At year-end an additional dimension was introduced in the models to better capture the impact of macroeconomic deterioration.

 

Additionally, we continued to use alternative sources of information in risk models in both the SME-Pyme and individuals segments.

 

D. Market Risk

 

We separate market risk into two groups: (i) exposure that arises from a fluctuation in the market value of the positions acquired, which are primarily registered in the fair value through profit and loss investments (Trading Book) and ii) exposure that arises due to a fluctuation in the value of asset and liability and the matching of structural positions registered at amortized cost and in the fair value through other comprehensive income portfolio (Banking Book).

 

Trading Book

 

To manage the trading book, Credicorp applies the VaR (Value at Risk) methodology to its trading portfolio to calculate the market risk of the main positions taken and to determine the maximum loss expected based on a series of assumptions that cover a variety of changes in market conditions. The daily measurement of VaR is a statistical estimate of the potential maximum loss on the current portfolio based on adverse movements in the market and with a confidence level of 99%.

 

The time horizon to measure the VaR is one day. The one-day VaR is also expanded to 10 days by multiplying the daily level by to square root of 10.

 

 

VaR 10d at Credicorp by risk type

 

Risk type	2021	2022
Interest rate risk	35,721	74,343
Price risk	4,637	5,219
Volatility risk	2,662	2,032
Diversification effect	(4,916)	(7,347)
VaR consolidated by risk type	38,104	74,247
Figures in S/ thousands.

 

The VaR calculation does not include the effects of the exchange rate, given that these effects are measured in the sensibility of the net monetary position.

 

The VaR registered an increase as of December 31, 2022, due to a higher interest rate risk which, in turn, was attributable to our higher exposure of fixed income instruments from the Colombian market. The VaR remained within the limits of the risk appetite set by Risk Department at each subsidiary.

 

The risk management for the Trading Book is accompanied by the use of indicators for stressed VaR and economic capital, which reflect the trading portfolio’s exposure to extreme movements in the risk factors to which it is subject. These indicators have a structure for limits and autonomies for each of the Group’s companies, which depends on the size of the positions and/or volatility of the risk factors contemplated for each financial instrument. The structure is, in turn, calculated based on the appetite for risk. On a regular basis, reports are prepared for Credicorp’s Risk Committee and for management at each of the Group’s companies. There is also a limit for the appetite for risk associated with the Trading Book at Credicorp, which is monitored and subsequently communicated to the Corporate Committee for Market, Structural, Trading and Liquidity Risk

 

Exchange rate risk is measured through the sensitivity of each foreign exchange position which affects the consolidated results or other comprehensive income (the calculation considers the foreign exchange position in dollars given that the position in other currencies is not significant). The market risk unit at each subsidiary monitor and controls each foreign exchange position and the exchange rate risk derived from the same.

 

In terms of the limits on the foreign exchange position, each of the subsidiaries sets its limits for subsequent approval by their risk committees. The strategies for foreign exchange rate management are contained in the portfolios of the Trading Book and consume the limits defined for each.

 

There is also a limit for Credicorp’s global exchange position in foreign currency, with is monitored and subsequently communicated to the Credicorp’s Risk Committee.

 

In 2022, we continued with our sensitivity analysis and stress tests to anticipate potential losses and generate plans of action for mitigation.

 

 

Banking Book

 

Banking book management at Credicorp covers the identification, measurement, evaluation, control and monitoring of Liquidity Risk and Structural Risk relative to the Interest Rate.

 

Liquidity Risk is defined as an inability to pay or refinance obligations that have been previously agreed on to maturity due to situations of mismatching of assets and liabilities, and the inability to liquidate investment positions that are subject to Price Risk, without generating adverse changes in the value of these positions.

 

Each of Credicorp’s subsidiaries manages liquidity risk according to corporate indicators:

 

●

Internal Liquidity Coverage Ratio (LCR), which measures liquidity risk for periods of 15, 30 and 60 days. This ratio is calculated by currency and by scenario (Systemic and Specific).

 

●

Internal Net Stable Funding Ratio (NSFR), which measures structural liquidity risk for periods over one year. This indicator ensures that a bank is financed by stable funding.

 

Additionally, we follow up on the liquidity gap, which provides a picture of the liquidity status within a specific gap.

 

These indicators have structures that contemplate limits and autonomies for each of the subsidiaries, which are subsequently included in the companies’ contingency plans for liquidity. At the Credicorp level, there are limits for risk appetite incorporated in these indicators, which are monitored and communicated to the Risk Committees.

 

In 2022, after central banks moved to gradually suspend measures to stimulate liquidity, on-going assessments of the sufficiency of liquid assets were conducted to cover or mitigate contingencies that may stress the funding requirements of the Group’s companies.

 

Interest Rate Risk Management in the banking book monitors variations in the interest rate that can negatively affect anticipated gains or the market value of assets and liabilities in the balance book. Credicorp follows up on all products that are sensitive to interest rate variations through the Repricing Gap, which is a sensitivity analysis that uses the PaR (Profit at Risk) calculation methodology and NEV (Net Economic Value).

 

Interest rate risk management is complemented with calculations of Economic Capital for ALM, which contemplates adverse and extreme behavior in the interest rate curves that place stress on the financing and asset structure of each of Credicorp’s subsidiaries.

 

This year, on-going follow-up was conducted of interest rate simulation models and behavioral models for products in the Banking Book to capture significant changes in the market over the period. Efforts we made to ensure that exposure to interest rate risk, economic value and financial margin was in line with the risk appetite and with the organization’s strategy in the current context.

 

 

ESG Risks

 

In 2022, and to make the current ESG Risk framework more robust and the financing and investment levels, the following milestones were hit:

 

Appetite axis

 

●

At the Corporate level, the Group updated and approved a list of excluded activities with an ESG focus.

●

For financing, an initial qualitative approximation was made to drive loans in sectors with high positive environmental impact.

 

Environmental taxonomy axis

 

●   At the financing level, the Environmental Taxonomy was developed and approved. This instrument was developed with international standards to identify operations that can be considered sustainable.

 

Identification, Assessment and Treatment

 

●   At the financing level, ESG sectorial questionnaires were complemented and developed to identify the level of exposure and manage our clients in the face of these risks. 

●   At the investment level, questionnaires on materiality and scoring that include ESG factors in the analysis of issuers were complemented and developed. The Policy for Climate Change, Relations Policy and Policy for Responsible Investment were modified to include ESG aspects in the assessment of investment assets and subsequently published.

 

For complete details on advances in ESG Risk, review the “Chapter 2. Environmental Management – Our ESG Risk Management” in the Sustainability Report.

 

Calculation of IFRS 9 provisions

 

The estimate of loan losses under IFRS 9 at Credicorp is the product of the following parameters: (i) probability of default (PD), (ii) loss given default (LGD) and (iii) exposure at the time of default (EAD), discounted at the reporting date using the effective interest rate or an approximation of the same. This also takes into consideration information on current conditions as well as projections of future macroeconomic events and conditions in three scenarios (base, optimistic and pessimistic), which are weighted to obtained expected loss.

 

The Models and Methodologies Area for Risk Management, Internal Audit and External audit lauch methodological and processes validations to guarantee the adequate calculation of provisions.

 

In 2022, estimates were made of anticipated losses on the loan portfolios of all of our companies on a monthly basis. Additionally, we continued to take final steps to launch the strategic tool IFRS 9, which will come into effect in the first few months of 2023. This new platform for calculation allows us to quickly execute and simulate different methodological changes as we work to make our security front more robust and mitigate exposure to non-financial risks.

 

Additionally, work continues to calibrate internal models for credit risk:

 

 

●    PD Models: we continued to conduct follow-up on the performance of PD models and have implemented the calibrations needed to ensure adequate measurement of credit risk across portfolios. 

●   LGD models: In 2020, an estimate was made of the pandemic’s impact on the LGD of refinanced loans in Retail Banking. In 2022, we calibrated this parameter with data that includes the behavior observed during the pandemic. Additionally, for retail NLP loans backed by mortgage guarantees, we calibrated the estimate of the recovery rate to reflect the coverage of the guarantee observed in the market.

 

Insurance Underwriting Risk

 

The main risk that Credicorp faces in terms of insurance contracts is that the real costs of claims and payments or the advent of the same differ from expectations. This risk is affected by claims frequency, the severity of claims, real compensation and the subsequent development of long-term claims. As such, the group’s objective is to guarantee that enough reserves are in place to cover these obligations.

 

Policy to set aside Underwriting Reserves

 

Credicorp permanently monitors the sufficiency of its reserves by taking measures when necessary to anticipate potential adverse results. The corporation hires independent and highly prestigious advisory firms that provide actuarial services. These companies are responsible for certifying the existence of adequate underwriting reserves at the companies that are part of Credicorp’s insurance group.

 

To protect the interests of our insured, and to comply with regulatory requirements, Credicorp monitors and measures the variables that may compromise the insurance group’s solvency and, as such, affect its capacity to honor its future obligations. As such, we quantify the impact that future strategic decisions may have on these indicators. The methodologies that are used to determine the reserve levels at the group’s insurance companies follow the guidelines set by current regulations.

 

In 2022, work focused on implementing operativity to adopt the new standard IFRS 17, which will come into effect in 2023.

 

Model Risk Management

 

The mission of the Area of Risk Model Management (ARM) at BCP is to manage the Group’s portfolio of models to minimize potential losses due to defects in construction, maintenance or use of the same.

 

In 2022, the level of alignment with the corporate rule for models of 75% to 85% rose, reflecting ongoing progress in improving control of risk models. In the ambit of model validation, standards were met throughout the models’ life cycle and a number of automations were developed to conduct some validations.

 

 

III. Non-financial Risks

 

Non-financial risk (NFR) is a broad term that is generally defined by exclusion, meaning that any risk that is different from traditional financial risks relate to the market, credit and liquidity. NFR can imply strategic, commercial and economic risk and/or risk of substantial reputational damage. NFR include the seven types of operating risks defined by the Basel Accords as well as other important risks such as technological, cybernetic, conduct, model, compliance, strategic and from third parties.

 

Non-financial Risk management has become challenging given the complexity added by rapid changes in technology; extensive automation of processes; more dependence on systems rather than people; and transformational processes such as business agility. These changes in the way that financial institutions do business have given way to new risk exposure, whether from attacks that affect the services of the Group’s companies, data theft or on-line fraud.

 

Operating Risk

 

Operating risks encompass losses due to inadequate processes, employee or IT errors, relationships with third parties or external events. These risks can produce financial losses and generate repercussions at the legal and regulatory level but exclude strategic and reputation risks. In this context, operating risks are grouped into internal fraud; external fraud; labor relations and occupational safety; relations with our clients; business products and practices; damage to material assets; business and system interruption; and errors relative to execution, delivery and management of processes.

 

We focused on operating risk on four fronts by establishing corporate guidelines and sharing methodologies and best practices with all of the Group’s companies:

 

●

Operating risk management: one of pillars of development is to develop an efficient risk culture. To accomplish this, we have a map of risks and process controls to monitor, prioritize and propose mitigating actions based on a previously established governance scheme.

 

●

Business continuity management: we have strategies to recover the resources that support the organization’s core products and services, which are based on best practices and regulatory requirements. The effectiveness of these strategies in measured periodically.

 

●

Information security management: conducted through a systemic process that is documented and known by the entire organization; based on best practices and regulatory requirements. We design and develop corporate guidelines with strategies that contemplate the availability, privacy and integrity of the organization’s information assets.

 

●

Risk transfer management: We rely on insurance policies to recover losses associated with operating risks that materialize. Our policies are both international and national and contemplate individual or corporate coverage for losses relative to incidents of fraud, third-party and professional liability, cybernetic risks, damages to the bank’s physical assets, among others. Policies are designed to cover the main operating risks at each subsidiary and are reflect the organization’s appetite for risk. The objective over time is to identify efficiencies at number policy cost level by working with Pacífico Seguros y Reaseguros and the largest reinsurance brokers in the international market.

 

In 2022, as part of the bank’s Crisis Management, protocols for response and strategies were developed, reviewed, updated and launched to handle different scenarios that may become crises and negatively impact the organization. The scenarios for which we are prepared and for which protocols are in place to ensure a timely and efficacious response: Cybersecurity, service interruption in channels and services, earthquake, pandemic, intensive rain, the El Nino Phenomenon, mass fraud, social upheaval and alternative communication in crisis.

 

 

Fraud and Security Management

 

The Corporate Security & Cybercrime Operations Center is in charge of actions to detect and respond to incidents of fraud and physical security. These tasks are developed by teams that specialize in transactional monitoring, research, cybercrime, physical/electronic security, disaster risk management and activities for strategic intelligence. These capacities are destined to safeguard the security of employees, clients, suppliers and the assets of the organizations. Complementarily, the Center provides support to the Group’s subsidiaries through the CREDICORP Way 2.0 program.

 

In 2022, the first stage of the Lynx project was launched, which entails applying improvements to monitoring with artificial intelligence and real time in channels such as Mobile Banking, E-Commerce and Home Banking. As a result, operating losses for fraud in digital channels fell by 66%. An initiative to automate alert management in the E-commerce channel was also rolled out.

 

On the physical security front, we continued developing the first phase of the project to adopt cutting-edge video surveillance at our main offices and at 24% of the branches. Additionally, strategic intelligence teams were consolidated to respond to new scenarios of social conflict and risks related to the current juncture.

 

Finally, on the research front, Digital Forensics LAB, concluded the Network Forensics project to facilitate automated control of risk scenarios involving internal fraud at the network level.

 

Cybersecurity

 

At Credicorp, we are aware that incidents of cybersecurity in the financial sector have grown exponentially in terms of frequency and damage to the reputation of organizations. Our clients’ trust is fundamental and as such, we prioritize strengthening our cybersecurity development and address this strategic front in all of our lines of business. The Group’s governance framework involves the entire organization, including employees, suppliers, Executive Management and the Board. The cybersecurity program is equipped with a plan of action to mitigate risks related to this front.

 

We educate our clients about cybernetic risks; constantly train our employees; increase the robustness of our processes; and consistently implement new technologies for phishing, malware, data leaks, distributed denial of service, among others.

 

Thanks to this cooperative effort, Credicorp experienced no successful cyberattack in 2022. Nevertheless, we remain alert to defend the Group form cyber threats by monitoring our network devices, applications and services and permanently evaluate the effectiveness of our controls. For more information about our Cybersecurity Management, see the chapter “3) Governance – Corporate Systems of Control and Management – Cybersecurity”

 

 

IV. Capital Management

 

Solvency Management

 

Credicorp actively manages the capital base to cover the risks that are inherent to its activities. The Group’s capital adequacy is monitored through, among other measures, the norms and ratios established by the regulator.

 

The objectives of capital management are:

 

●

Fulfill the requirements established for the risk appetite and those set by the regulators of the sectors where the group’s businesses operate.

●

Safeguard the capacity to continue operating to generate returns for shareholders.

●

Maintain a solid capital base to support the development of its activities.

 

At the end of December of 2022 and 2021, net equity at the companies dedicated to financial activities and insurance totaled approximately S/31,754.6 million and S/29,741.6 million respectively. Under local accounting, the Group’s effective equity exceed the minimum equity required by approximately S/8,157.0 million at the as of December 31, 2022 (approximately S/10,294.3 million as of December 31, 2021).

 

Our banking subsidiaries in Peru conduct regulatory stress tests on an annual basis. These stress tests are a set of procedures and routines that seek to simulate extreme scenarios that affect the institution to identify and assess vulnerabilities relative to the company’s solvency, income level and management in adverse macroeconomic and market scenarios.

 

The stress test includes potential crisis scenarios and identifies the areas that are most susceptible to the impact of stress and subsequently subject to risk mitigation actions. This procedure is aligned with the regulatory requirement (SBS N° 3780-2011), which must receive a report that assesses the financial solidness of the institution in both base and stress scenarios.

 

The stress process is multi-disciplinary and involves participants from areas throughout the organization, including Finance, Treasury, Economic Studies and Risks. First, the macroeconomic forecasts provided by the regulator are analyzed. Next, the impacts on the balance and results are estimated for a horizon of no less than three years. Subsequently, the Risk Management Committee and Board are informed of the results for their approval.

 

The results of this exercise are part of the Internal Capital Adequacy Assessment Process (ICAAP), whose main purpose is to assess if the institution will maintain adequate levels of capital in the event of a situation of stress.

 

Stress Tests play a fundamental role in measuring and analyzing the capacity of response in terms of solvency and provide feedback for decision making; assessment of business strategies; and evaluations of the framework to manage the appetite for risk.

 

 

Economic Capital

 

Economic capital represents the level of backing that a financial entity needs to protect itself from economic insolvency, which can be generated by unexpected shocks that adversely affect the value of assets and liabilities. Since 2011, Credicorp has used an economic capital model to preserve its target solvency levels in a sustained manner to maintain the organization’s international risk rating above scales equivalent to BBB+ and ensure the adequate risk-adjusted profitability.

 

Economic capital models work to complement the regulatory capital requirements and align with the industry’s best practices. As such, the main risks that each of the Group’s subsidiaries faces (credit risk, ALM risk, market risk, underwriting risk, business risk and operating risk) are consolidated in a single metric, incorporating the benefits of the diversification of distinct risk factors.

 

Chapter 6

 

Financial Statements

 

GRI 2-4

 

CREDICORP LTD. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2022 AND 2021

 

		Note		2022		2021
				S/(000)		S/(000)
Assets
Cash and due from banks:
Non-interest-bearing				7,286,624		6,925,332
Interest-bearing				26,897,216		32,395,408
		4		34,183,840		39,320,740
Cash collateral, reverse repurchase agreements and securities borrowing		5(a)		1,101,856		1,766,948
Investments:
At fair value through profit or loss		6(a)		4,199,334		5,928,538
At fair value through other comprehensive income				29,678,061		34,440,091
At fair value through other comprehensive income pledged as collateral				1,108,100		318,352
		6(b)		30,786,161		34,758,443
Amortized cost				6,905,201		4,411,592
Amortized cost pledged as collateral				3,540,528		3,853,967
		6(c)		10,445,729		8,265,559
Loans, net:		7
Loans, net of unearned income				148,626,374		147,597,412
Provision for credit losses				(7,872,402)		(8,477,308)
				140,753,972		139,120,104
Financial assets designated at fair value through profit or loss		8		768,801		987,082
Premiums and other policies receivable		9(a)		913,124		921.103
Accounts receivable from reinsurers and coinsurers		9(b)		1,106,674		1,198,379
Property, furniture and equipment, net		10		1,281,098		1,308,779
Due from customers on banker’s acceptances		3(r) and 7(b)		699,678		532,404
Intangible assets and goodwill, net		11		2,899,429		2,710,080
Right-of-use assets, net		12(a)		543,833		586,417
Deferred tax assets, net		19(c)		1,131,565		1,177,359
Other assets		13		5.938,515		6,264,805
Total assets				236,753,609		244,846,740

 

		Note		2022		2021
				S/(000)		S/(000)
Liabilities
Deposits and obligations:
Non-interest-bearing				43,346,151		51,851,206
Interest-bearing				103,674,636		97,745,339
		14(a)		147,020,787		149,596,545
Payables from repurchase agreements and securities lending		5(b)		12,966,725		22,013,866
Due to banks and correspondents		15(a)		8,937,411		7,212,946
Due from customers on banker's acceptances		3(r) and 7(b)		699,678		532,404
Accounts payable to reinsurers		9(b)		420,094		463,825
Lease liabilities		12(b)		578,074		655,294
Financial liabilities at fair value through profit or loss		3(ad)		191,010		337,909
Technical reserves for insurance claims and premiums		16		11,990,959		12,534,511
Bonds and notes issued		17		17,007,194		17,823,146
Deferred tax liabilities, net		19(c)		71,823		105,058
Other liabilities		13		7,290,145		6,533,797
Total liabilities				207,173,900		217,809,301
Equity, net		18
Equity attributable to Credicorp's equity holders:
Capital stock				1,318,993		1,318,993
Treasury stock				(207,518)		(207,534)
Capital surplus				231,556		228,853
Reserves				23,659,626		21,364,272
Other reserves				(650,116)		235,902
Retained earnings				4,635,599		3,556,281
				28,988,140		26,496,767
Non-controlling interest				591,569		540,672
Total equity, net				29,579,709		27,037,439
Total liabilities and net equity				236,753,609		244,846,740

 

The accompanying notes are an integral part of these consolidated financial statement.

CREDICORP LTD. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

 

		Note		2022		2021		2020
				S/(000)		S/(000)		S/000)
Interest and similar income		22		15,011,282		11,850,406		11,547,648
Interest and similar expenses		22		(3,493,187)		(2,490,802)		(2,978,696)
Net interest, similar income and expenses				11,518,095		9,359,604		8,568,952
Provision for credit losses on loan portfolio		7(c)		(2,158,555)		(1,558,951)		(6,080,289)
Recoveries of written-off loans				347,017		346,728		159,781
Provision for credit losses on loan portfolio, net of recoveries				(1,811,538)		(1,212,223)		(5,920,508)
Net interest, similar income and expenses, after provision for credit losses on loan portfolio				9,706,557		8,147,381		2,648,444
Other income
Commissions and fees		23		3,640,319		3,493,734		2,912,778
Net gain on foreign exchange transactions				1,084,151		922,917		676,973
Net gain on securities		24		5,468		28,650		523,082
Net gain on derivatives held for trading				65,187		221,064		56,244
Net loss from exchange differences				(16,158)		(3,215)		(18,932)
Others		29		329,382		266,567		289,037
Total other income				5,108,349		4,929,717		4,439,182
Insurance underwriting result
Net premiums earned		25		2,873,295		2,671,530		2,428,060
Net claims incurred for life, general and health insurance contracts		26		(1,929,890)		(2,341,917)		(1,708,113)
Acquisition cost				(281,807)		(333,334)		(361,814)
Total insurance underwriting result				661,598		(3,721)		358,133
Other expenses
Salaries and employee benefits		27		(4,052,780)		(3,668,476)		(3,312,954)
Administrative expenses		28		(3,505,101)		(2,953,717)		(2,383,718)
Depreciation and amortization		10 and 11(a)		(532,169)		(521,967)		(497,910)
Impairment loss on goodwill		11(b)		–		–		(63,978)
Depreciation for right-of-use assets		12(a)		(151,335)		(161,287)		(172,005)
Others		29		(379,230)		(435,114)		(760,124)
Total other expenses				(8,620,615)		(7,740,561)		(7,190,689)

Net result before income tax				6,855,889		5,332,816		224,161
Income tax		19(b)		(2,110,501)		(1,660,987)		109,977
Net result after income tax				4,745,388		3,671,829		334,138
Attributable to:
Credicorp’s equity holders				4,633,096		3,584,582		346,894
Non-controlling interest				112,292		87,247		(12,756)
				4,745,388		3,671,829		334,138
Net basic and dilutive earnings per share attributable to Credicorp’s equity holders (in soles):
Basic		30		58.26		45.09		4.37
Diluted		30		58.13		44.99		4.36

 

The accompanying notes are an integral part of these consolidated financial statement.

 

CREDICORP LTD. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

 

				2022		2021		2020
				S/(000)		S/(000)		S/(000)
				4,745,383		3,671,029		334,138
Net profit for the year
Other comprehensive income:
To be reclassified to profit or loss in subsequent periods:
Net (loss) gain on investments at fair value through other comprehensive income		18(d)		(1,622,912)		(2,491,907)		870,218
Income tax		18(d)		82,459		52,086		(11,717)
				(1,540,453)		(2,439,821)		858,501
Net movement of cash flow hedge		18(d)		1,246		58,586		(15,183)
Income tax		18(d)		(158)		(16,834)		3,933
				1,088		41,752		(11,250)
Other reserves		18(d)		938,442		769,291		(263,820)
Income tax		18(d)		–		(26,846)		26,846
				938,442		742,445		(236,974)
Exchange differences on translation of foreign operations		18(d)		(296,402)		161,168		257,052
Net movement in hedges of net investments in foreign businesses		18(d)		39,587		(57,319)		(1,219)
				(256,815)		103,849		255,833
Total				(857,738)		(1,551,775)		866,110
Not to be reclassified to profit or loss in subsequent periods:
Net loss on equity instruments designated at fair value through other comprehensive income		18(d)		(35,384)		(113,686)		(82,586)
Income tax		18(d)		2,109		5,402		3,414
				(33,275)		(108,284)		(79,172)
Total				(33,275)		(108,284)		(79,172)
Total other comprehensive income		18(d)		(891,013)		(1,660,059)		786,938
Total comprehensive income for the year, net of income tax				3,854,375		2,011,770		1,121,076
Attributable to:
Credicorp’s equity holders				3,747,078		1,954,586		1,124.603
Non-controlling interest				107,297		57,184		(3,527)
				3,854,375		2,011,770		1,121,076

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

Annexes

 

A. Economic Group

 

GRI 2-2, 2-6

 

In accordance with the stipulations in Circular 090-2017-SMV, companies that list on the Lima Stock Exchange must produce an Annual Report according to the guidelines set forth in the “Manual to Prepare Annual Reports, Quarterly Reports and other Informative Documents” and in the “Common Rules to Determine the Contents of Informative Documents.” In compliance with the requirements established by the Superintendence of the Securities Market and with those set forth in the aforementioned rules, the following section of our Annual Report contains, among other elements, a brief description of each of the subsidiaries in the Credicorp economic group.

 

Credicorp Ltd. (“Credicorp”)

 

Credicorp is a holding company and the main shareholder of Grupo Crédito S.A., Atlantic Security Holding Corporation, Pacífico Compania de Seguros y Reaseguros S.A., Credicorp Capital Ltd. and CCR Inc. Founded in Bermuda in 1995, Credicorp’s principal activity is to manage coordinately the design and execution of its subsidiaries’ business plans to implement universal banking and financial services in Peru while selectively diversifying at the regional level. Credicorp conducts business exclusively through its subsidiaries.

 

Subsidiary Companies of Credicorp

 

Grupo Credito S.A.

 

100% subsidiary of Credicorp. The company's purpose is to engage in all types of commercial activities, investments in securities, buying and selling of stocks and securities, and business in general. Currently, it owns 97.74% of BCP's shares and subsidiaries, 99.99% of PRIMA AFP, 99.99% of Credicorp Peru S.A.C., 99.90% of Grupo Crédito Inversiones S.A., 99.99% of Soluciones en Procesamiento Peru S.A. - Servicorp, 99.91% of Inversiones 2020 S.A., 98.15% of Inversiones Credicorp Bolivia S.A., which in turn has 95.84% of Banco de Crédito de Bolivia S.A., 99.93% of Credifondo Sociedad Administradora de Fondos de Inversión S.A. Bolivia and 99.80% of Credibolsa S.A. Agencia de Bolsa - Bolivia. Furthermore, Grupo Crédito S.A. owns 100.00% of Compañía Incubadora de Soluciones Móviles S.A., 85% of Fondo de Inversión Independencia II, 100.00% of Tenpo S.P.A. (formerly Krealo S.P.A.) and subsidiaries, 100% of Krealo Management S.A., 100% of Ventive Servicios De Consultoría España, S.L. and 100% of Yape Market S.A.C.

 

Atlantic Security Holding Corporation

 

This company was incorporated in the Cayman Islands. It is a wholly owned subsidiary of Credicorp. Atlantic Security Holding Corporation owns 100% of the shares of ASB Bank Corp. (formerly Atlantic Security Bank - ASB), Atlantic Security Int. Financial Services Inc., Atlantic Security Private Equity General Partner, Atlantic Private Equity Investment Advisor and 96% of ESIMSA.

 

CCR Inc.

 

This vehicle was established in Bermuda to manage BCP’s securitization transactions in the international market, which are guaranteed by future collections on payment orders for international fund transfers in US Dollars that are received by the foreign banks associated with the Society for Worldwide Interbank Financial Telecommunications (SWIFT). This subsidiary is 100% owned by Credicorp.

 

 

Credicorp Capital Ltd.

 

Credicorp Capital Ltd is 100% subsidiary of Credicorp, was chartered in Bermuda in 2012. Credicorp Capital Ltd holds 99.99% of the shares of Credicorp Capital Holding Chile S.A.; 100% of Credicorp Capital Holding Colombia S.A.S.; 100% of Credicorp Capital UK Limited; 99.99% of Credicorp Capital Holding Peru S.A.A.; and 100% of Credicorp Capital USA Inc. and subsidiaries.

 

Pacifico Compania de Seguros y Reaseguros S.A.

 

On August 1, 2017, the merger by absorption between El Pacífico Vida Compañía de Seguros y Reaseguros and El Pacifico Peruano Suiza Compania de Seguros y Reaseguros ("PPS") was carried out, forming the new entity Pacifico Compania de Seguros y Reaseguros S.A., of which Credicorp Ltd. owns 65.20% and Grupo Credito participates with 33.66%.

 

Pacífico Peruano Suiza Companía de Seguros y Reaseguros ("PPS") was an insurance company that arose from the merger of El Pacífico Compania de Seguros y Reaseguros and Peruano Suiza Compania de Seguros y Reaseguros, companies that had a presence in the Peruvian insurance market for more than 45 years. El Pacifico Vida Compania de Seguros y Reaseguros began operations on January 1, 1997 and had positioned itself as a specialist in this type of insurance.

 

In 1999, PPS established a new subsidiary called Pacífico S.A. Entidad Prestadora de Salud (Pacifico Salud "EPS"), owning 99.99% of the shares. The main activity of Pacífico Salud comprises the provision of health prevention and recovery services as an alternative to social security. In January 2015, a Joint Venture was established with Banmedica, of which Pacifico Compania de Seguros y Reaseguros S.A. owns 50%, so Pacifico EPS became an associate.

 

Pacifico Compania de Seguros y Reaseguros S.A. directly owns 48% of Crediseguro S.A. Seguros Personales and 48.04% of Crediseguro S.A. Seguros Generales, both companies domiciled in Bolivia. Likewise, it owns 100% of Pacifico Asiste S.A.C.

 

Subsidiary Companies of the Grupo Crédito S.A.

 

Banco de Credito del Peru – BCP

 

BCP is a commercial bank. It was established in Peru in 1889. The Bank´s operations are currently governed by the General Law of the Financial and Insurance Systems and Organic Systems of the SBS. Grupo Credito is the main shareholder; it owns 97.74% of the shares directly. BCP is the largest institution in the Peruvian financial system and is the leading financial service provider.

 

Prima AFP

 

This company is a private pension fund manager and is 99.99% owned by Grupo Credito S.A. It was founded in 2005. In 2006, Prima AFP acquired 100% of the shares of AFP Union Vida, another pension fund manager, through a merger.

 

Credicorp Peru S.A.C. (ex – Cobranzas y Recuperos S.A.C)

 

Credicorp Peru engages in all kinds of commercial activities, investments in securities, buying and selling shares and securities as well as new business development. The company also engages in extra-judicial and judicial collections for all types of credit instruments, securities or overdue loan portfolios that are either acquired or received from affiliated companies or third parties. This company can also engage in activities to capture, process and digitalize information, develop databases, process securities, evaluate different requests that are credit or non-credit related, engage in collections services, telemarketing, advisory services, administrative services and sales of advertising in addition to all services that are complementary to the aforementioned. Additionally, the company can buy, sell, legally title and register properties that are adjudicated through collections processes. Grupo Crédito holds 99.99% of the shares in this company.

 

 

Inversiones 2020 S.A.

 

Inversiones 2020 is 99.91% subsidiary of Grupo Crédito. It was established in October 1999 and its corporate purpose is to manage and promote the sale of foreclosed real estate properties and/or BCP’s properties. In July 2008, it absorbed the companies Inversiones Conexas y Complementarias S.A. and BCP Sociedad de Proposito Especial.

 

Inversiones Credicorp Bolivia S.A.

 

This company is a subsidiary of Grupo Crédito, which owns 98.15% of total shares. It was established in February 2013. To date, Inversiones Credicorp Bolivia SA holds 99.93% of the shares of Credifondo SAFI Bolivia, 99.80% of Credibolsa S.A. Agencia de Bolsa (Bolivia), 51.95% of Crediseguro S.A. Seguros Personales, 51.87% of Crediseguros S.A. Seguros Generales, and 95.91% of Banco de Crédito Bolivia S.A.

 

Compania Incubadora de Soluciones Moviles S.A. - Culqi

 

In January 2019, Grupo Crédito acquired 91.36% of the shares of this entity. Currently, Grupo Crédito holds 91.69%. Culqi was created in December 2013. Its main objective is to develop and operate a technological platform for online payments for digital businesses. Through APIs and e-commerce tools, which are designed for software developers, Culqi connects payment venues and platforms (such as credit cards, debit cards and prepaid cards) with websites, mobile applications, chatbots, IVRs, among others. Culqi also develops online payment bridges; onsite payment through POS or other devices; and methods to capture information, including QR.

 

Fondo de Inversion Independencia II

 

In September 2019, Grupo Crédito acquired 85% of the shares of this entity. Fondo de Inversion Independencia II provides personal loans via a digital platform.

 

Ventive Servicios De Consultoría España, S.L

 

In June 2021, Grupo Crédito established Ventive Servicios De Consultoría España, S.L with the purpose of providing consulting services to Credicorp Group.

 

Tenpo S.P.A (formerly Krealo S.P.A.)

 

In January 2019, Grupo Crédito set up Tenpo S.P.A. (formerly Krealo S.P.A.) in Chile to make investments in companies, real estate and movable assets. Tenpo S.P.A. (formerly Krealo S.P.A.) acquired 100% of Tenpo Technologies S.P.A. (formerly Tenpo S.P.A.), which provides services and sells digital products, computing tools and telecommunication-related products, and 100% of Tenpo Prepago S.A. (formerly Multicaja Prepago S.A.), which issues and operates prepaid cards.

 

Yape Market S.A.C.

 

In July 2022, Grupo Crédito S.A. established Yape Market S.A.C. and currently owns 99.99% of the company. The business aims to promote and manage sales and placement of products and services through electronic media. It may also engage in activities related to e-commerce, technological platforms, and online advertising.

 

Krealo Management S.A.

 

Krealo Management S.A. was incorporated in September 2022 with the purpose of being a Peruvian holding company. It currently owns 99.99% of Wally POS S.A.C., 99.99% of Sami Shop S.A.C., and 59.96% of Monokera S.A.S.

 

 

Wally POS S.A.C.

 

Wally POS S.A.C. was acquired in February 2022 with the purpose of facilitating the management of clients' businesses through electronic tools and software that allow for control of key aspects such as electronic invoicing, inventory control, and reporting. Currently, Krealo Management holds 99.99% ownership of the company.

 

Sami Shop S.A.C.

 

Sami Shop S.A.C was acquired in June 2022, and currently, Krealo Management owns 99.99% of the company. It is a company that offers e-commerce platforms to small, medium, and large businesses. It aims to solve the problem that many businesses face when creating an online store that can actually sell, by resolving all the processes of online sales, such as payment methods, integrations with the commerce's own systems, and logistics.

 

Monokera S.A.S.

 

Monokera S.A.S. was acquired in December 2022, and currently, Krealo Management holds a 59.96% stake in the company. It is a company that offers e-commerce platforms for contracting insurance products.

 

Subsidiary Companies of Inversiones Credicorp Bolivia S.A.

 

Banco de Crédito de Bolivia S.A.

 

Banco de Crédito de Bolivia S.A. is a subsidiary of Inversiones Credicorp Bolivia S.A., which, together with Credicorp, holds 100% of its shares. It was acquired from the Peruvian Government in November 1993, when it was operating under the name Banco Popular S.A. This bank began operations in 1942 as a branch of Banco Popular del Peru.

 

The Banco de Crédito de Bolivia is a commercial bank that serves clients in the corporate banking, middle market banking and personal banking segments. It differentiates among these segments to serve them more efficiently.

 

Credibolsa S.A. Agencia de Bolsa

 

This company was chartered on October 21, 1994 in Bolivia. Its purpose is to conduct stock exchange operations through securities trading. Credibolsa S.A. Agencia de Bolsa can also trade securities for third parties; provide advisory and financial consulting services; manage securities portfolios; or represent foreign brokerage firms and foreign natural or legal persons who engage in activities relative to the securities market. The company can make public offers of securities through issuers, invest in the shares of other companies that provide services that are necessary or complementary to the securities market, among other activities. Inversiones Credicorp Bolivia holds 99.80% of total shares in this entity.

 

Credifondo SAFI S.A.

 

This company was chartered on April 7, 2000 in Bolivia to offer investment fund management services. Inversiones Credicorp Bolivia holds 99.93% of the total shares of this entity.

 

Crediseguro S.A. Seguros Personales

 

Crediseguro S.A. Seguros Personales is a limited company. It was incorporated on January 24, 2012 and its legal domicile is in the city of La Paz – Bolivia. The company’s sole purpose is, in accordance with Insurance Law N° 1883 of June 25,1998, to conduct, on its own account, or for third party accounts or accounts associated with third parties, both in Bolivia and abroad, activities related to personal insurance to insure natural persons, covering services relative to health or physical integrity. For this purpose, the company may engage in all businesses and

 

 

activities that are related to insurance, co-insurance and reinsurance of persons or businesses that are authorized to operate by entities that work in the personal insurance segment. Inversiones Credicorp Bolivia S.A. owns 51.95% of this company and Pacífico Compania de Seguros y Reaseguros S.A., 48.00%.

 

Crediseguro S.A. Seguros Generales

 

This company was chartered in La Paz, Bolivia on 2017. Inversiones Credicorp Bolivia S.A. owns 51.87% of the total shares of this entity, and Pacífico Compañia de Seguros y Reaseguros S.A., 48.04%.

 

Subsidiary Companies of Atlantic Security Holding Corporation

 

ASB Bank Corp, (formerly Atlantic Security Bank – ASB)

 

This bank was chartered in Cayman Islands in 1981, subsequently, Atlantic Security Bank (ASB) and ASB Bank Corp merged, leaving the latter as the only existing company registered in Panama. ASB Corp. engages in fund management, private banking, proprietary investment management and commercial banking. It is wholly (100%) owned by the Atlantic Security Holding Corp.

 

Atlantic Security Private Equity General Partner

 

This company was established in Cayman Islands to maintain the investment in the Carlyle Peru Fund. It is a wholly (100%) owned subsidiary of the Atlantic Security Holding Corp.

 

Atlantic Private Equity Investment Advisor

 

The company was established in Cayman Islands to provide advisory services to the Carlyle Peru Fund. It is a wholly (100%) owned subsidiary of Atlantic Security Holding Corp.

 

Atlantic Security International Financial Services Inc.

 

Company incorporated in Panama with the purpose of carrying out financial activities. It is a 100% subsidiary of Atlantic Security Holding Corp.

 

ESIMSA

 

Empresa de Servicios Inmobiliarios y de Mantenimiento S.A. (ESIMSA) is a limited liability company. It was established on October 3, 2012 in La Paz - Bolivia. ASHC holds 96% of the total shares in this entity.

 

The purpose of this company is to engage in proprietary, third party or third-party associated transactions involving the real estate business and associated activities. The company provides services relative to real estate and movable properties.

 

Credicorp Capital Cayman GP

 

Company incorporated in Cayman Islands in October 2022 for the purpose of conducting financial activities. It is a 100% subsidiary of Atlantic Security Holding Corp.

 

 

Subsidiary Companies of Credicorp Capital Ltd.

 

Credicorp Capital Holding Chile S.A.

 

This company was established in Chile in 2012. Credicorp Capital Ltd. owns 99.99% of its shares. Credicorp Capital Holding Chile S.A. owns, in turn, 99.99% of Credicorp Capital Chile.

 

Credicorp Capital Chile

 

This company was chartered on October 7, 1985. Its purpose is to engage in all types of investments involving movable and immovable assets, both tangible and intangible, shares, bonds, debentures and rights or shares in any companies, promissory notes, bills of exchange, certificates of deposit, negotiable documents and, in general, all kinds of transferable securities and commercial effects in addition to issuing common or performance bonds to all types of persons. It holds 99.90% of the shares of Credicorp Capital Asesorias Financieras S.A., 99.95% of Credicorp Capital S.A. Administradora de Inversiones, 99.93% of Credicorp Capital S.A. Corredores de Bolsa, 100% of IM Trust International S.A. and 99.94% of Credicorp Capital Asset Management S.A. Adm. General de Fondos.

 

Credicorp Capital UK Limited

 

This company was established in England in January 2014 to capture clients in the United Kingdom. Credicorp Capital Ltd. possesses 100% of the shares of this entity.

 

Credicorp Capital Holding Peru S.A.

 

This company was established in Peru in June 2015. Its corporate purpose was to serve as the Peruvian holding of the Investment Bank. It directly holds 85.06% of the total shares of Credicorp Capital Peru S.A.A. Credicorp Capital Ltd. holds 99.99% of the shares of this entity.

 

Credicorp Capital Peru S.A.A.

 

Credicorp Capital Peru S.A.A began its operations in May 2012 and is a subsidiary of Credicorp Capital Holding Peru S.A. and Credicorp Capital Ltd, which hold 85.07% and 12.795% of its shares respectively. Currently, Credicorp Capital Peru S.A.A. holds 99.99% of the shares of Credicorp Capital Sociedad Agente de Bolsa S.A., 99.99% of Credicorp Capital Sociedad Administradora de Fondos, 99.99% of Credicorp Capital Sociedad Titulizadora S.A., and 99.99% of Credicorp Capital Servicios Financieros S.A. In addition, Credicorp Capital Peru S.A.A. also holds 45% of the shares of Fiduciaria S.A.

 

Credicorp Holding Colombia S.A.S.

 

The company was chartered in Colombia in 2012 and is a wholly owned subsidiary of Credicorp Capital Ltd. Credicorp Holding Colombia S.A.S. in turn holds 82.64% of Credicorp Capital Colombia S.A. (in June 2020 it merged with Ultraserfinco S.A.), 94.93% of Credicorp Capital Fiduciaria S.A., 100% de Credicorp Negocios Digitales S.A.S., 100% de Credicorp Capital Servicios S.A.S. and 85.58% de Mibanco - Banco de la Microempresa de Colombia S.A (formerly Banco Compartir S.A., which in October 2020 it merged with Edyficar S.A.S.).

 

Credicorp Capital USA Inc.

 

The company was acquired by the Group in November 2019, it is 100% subsidiary of Credicorp Capital Ltd. Also, Credicorp Capital USA Inc. holds 100% of Credicorp Capital Advisors LLC and Credicorp Capital LLC (formerly Ultralat Capital Market Inc).

 

 

Subsidiary Companies of Credicorp Capital Peru S.A.A.

 

Credicorp Capital Sociedad Agente de Bolsa S.A.

 

This company was established in 1991 in Peru and its one of the main brokerage houses on the Lima Stock Exchange. It offers services to buy and sell securities and actively participates in placing financial instruments. Credicorp Capital Peru S.A.A holds 99.99% of the shares of Credicorp Capital Sociedad Agente de Bolsa S.A.

 

Credicorp Capital S.A Sociedad Administradora de Fondos

 

This company is a mutual fund manager and is one of the largest in the system. Credifondo, which was established in 1994, manages different mutual funds that channel clients’ resources to investment opportunities with varying levels of risk and anticipated returns. Credicorp Capital Peru S.A.A. owns 99.99% of its shares.

 

Credicorp Capital Sociedad Titulizadora S.A.

 

This is securitization company was established in 1998 and acts as a fiduciary in asset securitization processes. Credititulos acts as a vehicle to purchase assets, which are subsequently transformed into financial products, which are sold on the market. Credicorp Capital Peru S.A.A. owns 99.99% of its shares.

 

Credicorp Capital Servicios Financieros S.A.

 

The company was chartered in Peru in 2012 with the purpose of providing advisory services at the corporate and financial levels. It is a subsidiary of Credicorp Capital Peru, which holds 99.99% of the total shares in this entity.

 

Subsidiary Companies of Credicorp Holding Colombia S.A.S.

 

Credicorp Capital Colombia S.A.

 

This company was chartered in Colombia in 1987 to execute commissions contracts for the purchase and sale of securities. It also conducts transactions for its proprietary account to help stabilize market prices and provide liquidity. Credicorp Capital Colombia S.A. manages its clients’ securities to execute collections on capital and yields for subsequent reinvestment. This company also manages investment funds; provides advisory services in the capital markets; acts as a broker for securities in the National Registry of Securities; manages third-party portfolios and correspondence agreements; and acts as a broker in the foreign exchange market. Credicorp Holding Colombia S.A.S. holds 82.64%, Credicorp Capital Ltd. holds 10.10% and Credicorp Capital Fiduciaria S.A. holds 7.26%.

 

On June 27^th, 2020, the merger by absorption between Credicorp Capital Colombia S.A. and Ultraserfinco S.A. was carried out; the latter being extinguished.

 

Credicorp Capital Fiduciaria S.A.

 

This company was chartered in Colombia on April 25, 2012 with the purpose of executing all or some of the transactions, actions or services relative to its businesses and fiduciary mandates. Credicorp Holding Colombia S.A.S. holds 94.93% and Credicorp Capital Servicios S.A.S., 5.04%.

 

Mibanco – Banco de la Microempresa Colombia S.A

 

 

This company was chartered on October 23, 1969 through Public Registry N^o. 8136. Its primary purpose is to engage in all the businesses and transactions permitted for banking establishments under Colombian law, particularly with regard to capturing resources to engage in active loan operations, notwithstanding the transactions and investments contemplated in the applicable regimen and within the conditions or limitations indicated for said effect. The bank’s purpose is to promote the development of the microfinance market in Colombia by providing loans to micro and small businesses. Credicorp Holding Colombia S.A.S. holds 85.58% of the total shares in this entity. On October 30^th, 2020, the merger by absorption between Banco Compartir S.A. and Edyficar S.A.S was carried out, which formed Mibanco - Banco de la Microempresa de Colombia S.A.

 

Credicorp Capital Servicios S.A.S.

 

Company incorporated in December 2019 in Colombia, its purpose is to carry out commercial activities. Credicorp Holding Colombia S.A.S. owns 100% participation.

 

Credicorp Negocios Digitales S.A.S

 

This company was chartered in March 2019 in Colombia to engage in information system development; computer consulting; and administration of information installations. Credicorp Holding Colombia S.A.S. holds 100% of the shares of this entity.

 

Credicorp Capital Corporación Financiera S.A.

 

This company was established in July 2022 with the purpose of providing financial services such as savings accounts, standardized and OTC derivatives, fixed income operations, and spot currency trading. It is expected to obtain authorization from the Colombian Superintendency of Finance in March 2023. Credicorp Holding Colombia S.A.S. owns 94.90% of the shares, and Credicorp Capital Servicios S.A.S. owns 5.10%.

 

Subsidiary Companies of the Banco de Crédito del Peru

 

Mibanco S.A.

 

Mibanco S.A., is a limited liability company that was established in Peru on March 2^nd, 1998. At the end of December 2021, BCP held 94.93% of this entity and Grupo Crédito, 4.99%.The corporate purpose of the bank is to engage in multiple banking services with a special emphasis on the micro and small business segments. The Bank’s operations are governed by the General Law of the Financial System and of Insurance and Organic System of the Superintendence of Banking, Insurance and AFP (herewith “Law of Banking, Insurance and AFP”) – Law N°26702. Mibanco S.A. is authorized by SBS to operate as a bank in accordance with the legal provisions in effect in Peru.

 

Solucion Empresa Administradora Hipotecaria S.A.

 

This company specializes in offering mortgage loans. It was initially established as a financial company in 1979. After several modifications to the company’s structure, it became a mortgage loan company in May 2010. BCP owns 100% of its shares.

 

 

BCP Emisiones Latam 1 S.A.

 

This special purpose company is domiciled in Santiago, Chile. It was established in January 2009 and its sole purpose is to invest in all types of real estate securities and debt securities, which are financed through bond issuances in Chile. Currently, BCP maintains 50.39% of its shares and Grupo Crédito owns the 49.61%. The company was liquidated in March 2022.

 

 

B. Sanctions imposed by regulators

 

Material Topic Normative Compliance

GRI 3-3, 2-27  

SASB FN-CB-510a.1

Pillar 3

 

Resolution SBS N°2755-2018 of July 16, 2018 requires Boards to inform the General Shareholders’ Meeting of sanctions imposed by the Superintendency of Banking, Insurance and AFPs (SBS) for serious or very serious violations attributable to the companies supervised, their directors, managers or main officers.

 

In this regard, in the month of April 2022, SBS imposed a sanction of 20 UIT (S/92,000) on Pacífico Compañía de Seguros y Reaseguros S.A for the following serious violation: “failure to partially or totally fulfill activities relative to actuarial functions as indicated in current regulations” described in numeral 71 section II of Annex 3 of SBS Regulation for Violations and Sanctions. Pacífico has taken corrective measures in response to this situation.

 

In the month of April 2022, SBS imposed a sanction of 20 UIT (S/92,000) on Mibanco Banco de la Microempresa S.A to the following serious violation: “open, transfer, convert, share or close offices, branches or other type of establishment without the authorization of the Superintendency” described in numeral 4 of section II of Annex 1 of SBS Regulation for Violations and Sanctions. Mibanco has paid the fine levied in its entirety and has taken the corresponding corrective measures.

 

In the month of May 2022, SMV imposed a sanction of 3.5 UIT (S/15,050) on Prima AFP S.A for the following serious violation: “failure to communicate material events or present audited individua or consolidated financial information, intermediate individual or consolidated financial statements, management reports or special auditing reports and annual reports” described in numeral 2.10 of Annex I of SMV’s Regulation for Sanctions. The fine imposed has been completely paid by Prima AFP and the company has taken the corresponding corrective measures.

 

Finally, in the month of June 2022, SBS imposed a sanction of 25 UIT (S/115,000) on Pacífico Compañía de Seguros y Reaseguros S.A for the following serious violation: “failure to provide, within the timeframes established and/or according to the conditions set for each case, information and/or documentation to the Superintendency to facilitate its supervision and control activities” described in letter d) of numeral 1 of section II of Annex 1 of SBS’s Regulation for Violations and Sanctions. Pacífico has taken the corresponding corrective measures.

 

 

C. Legal Processes

 

Material Topic Normative Compliance

GRI 2-27

SASB FN-CB-510a.1

Pillar 3

 

Unless indicated in the last section of this paragraph, Credicorp Ltd. is not involved in judicial processes either as a plaintiff or defendant. Nevertheless, Credicorp Ltd. was the subject of an Administrative Sanctioning Procedure, which was initiated by the Superintendence of the Peruvian Securities Market (SMV) at the end of 2019 for failing to provide timely information to the market about the contributions made to political campaigns in 2011 and 2016 (in the latter case, contributions were made by three of the Group’s subsidiaries). Credicorp Ltd. was notified of the ruling of first instance that levied monetary sanctions; Credicorp appealed this ruling. Given that SMV failed to appeal within the timeframes required by law, Credicorp Ltd. has presented a legal recourse (a contentious-administrative action), which was admitted by the competent Court. The Administrative Sanctioning Procedure has ended, and the controversy must be reviewed and decided by the Court. Notwithstanding, Credicorp Ltd. paid the fine imposed by the administrative ruling of the first instance, in compliance with applicable rules. To date, the controversy remains unresolved, and the Court’s review and decision are pending.

 

Three of Credicorp’s subsidiaries, the Banco de Crédito del Peru, Mibanco and Grupo Pacífico were involved in one Administrative Sanctioning Procedure each. These procedures were initiated by the Superintendence of the Peruvian Securities Market (SMV) at the end of 2019 for the following: failure to timely inform the market of contributions made to the political campaign in 2016. These companies were notified about the rulings of first instance, which levied monetary sanctions. Said administrative rulings of first instance were appealed in a timely manner by each of the companies. Given that the appeals were not resolved by SMV within the timeframes contemplated by law, each of the three subsidiaries has filed a legal recourse (a contentious-administrative action); all three remedies were admitted by the Court. Given that the administrative sanctioning procedures have ended, controversies must be reviewed and decided by the Court. Notwithstanding, each of the three subsidiaries have paid the fine imposed by the administrative ruling in the first instance, in compliance with applicable rules. To date, the controversies have yet to be resolved and are pending review and decision by the Court.

 

Some of the Group’s subsidiaries are involved in judicial processes and Administrative Sanctioning Procedures. Among the most relevant judicial processes underway, we have the processes for (i) Madoff Trustee Litigation y (ii) Fairfield Litigation, which involve ASB Bank Corp., subsidiary of Credicorp Ltd., as a defendant. For more details, see “Form 20-F 2020” (20-F page 268).

 

Finally, Credicorp Ltd. notified SMV on November 11, 2021 that its Deputy General Manager on said date (and current general manager), Mr. Gianfranco Ferrari de las Casas, has received a Notification from the Attorney General’s Office that he has been included in a preparatory investigation, along with 64 others, for alleged primary complicity to commit a crime against public administration, aggravated collusion, incompatible negotiation, and undue use of position and criminal organization against the Peruvian State with regard to Proyecto Olmos. To date, Mr. Gianfranco Ferrari de las Casas is still included in the aforementioned preparatory investigation with regard to Proyecto Olmos.

 

Credicorp Ltd. has carefully reviewed the actions of the officers of the Banco de Crédito del Peru with regard to the Proyecto Olmos and has found that the facts under investigation do not imply any liability for our company or its officers.

 

In Management’s opinion, none of the aforementioned events will affect the normal performance of the Group’s activities and businesses.

 

D. Superintendent Resolution 119-2017-SMV/02

 

 

REPORT ON THE SHAREHOLDER STRUCTURE BY INVESTOR TYPE (10190)

 

Company Name:

 

Credicorp LTD.

 

Fiscal Year:

2022

 

METHODOLOGY:

 

The information to be presented refers to the shares or representative values for participation in a Company that are listed on the S&P/BVL Peru Select Index, in accordance with the information published on the web page of the Lima Stock Exchange at the end of the fiscal year reported.

 

The Company must indicate, for each share or representative value of the same that is listed on the aforementioned index, the composition of the share structure by shareholder type.

 

Shareholder structure by investor type

 

Share:

BMG2519Y1084

 

Ownership by shareholder type of a share or representative value of participation that is listed on the S&P Peru Selective Index (end of the fiscal year)	Number of holders	% of participation (3)
1. Members of the board and executive management, including relative (1).	27	0.25%
2. Employees at the company, not included in number 1.	1,077	0.42%
3. Natural person not included in numbers 1 and 2.	4,282	2.99%
4. Pension funds managed by Pension Fund Managers under the supervision of the Superintendence of Banking, Insurance and AFP.	0	0.00%
5. Pension fund managed by the Oficina de Normalizacion Previsional (ONP).	0	0.00%
6. Entities of the Peruvian State with the exception of the assumption included number 5.	1	0.15%
7. Banks, finance institution, municipal savings and loans, rural savings and loan and cooperatives for savings and loans, under the supervision of the Superintendence of Banking Insurance and AFP.	2	0.00%
8. Co-Insurance companies under the supervision of the Superintendence of Banking, Insurance and AFP.	0	0.00%
9. Brokerage firms, under the supervision of SMV.	5	0.001%
10. Investment funds, mutual funds and trusts covered by the Law for the Securities Market and the Law for Investment Funds and Banking Trusts covered by the General Law for the Financial System.	24	0.65%

 

 

11. Autonomous equity and banking trust abroad to the extent that the same can be identified.	0	0.00%
12. Foreign depositaries that figure as shareholders in the framework of ADR or ADS programs.	0	0.00%
13. Foreign depositaries that figure as shareholders not included in number 12.	1	89.59%
14. Foreign custodians that figure as shareholders.	0	0.00%
15. Entities not included in the descriptions in the previous numeral (2).	124	6.03%
16. Shares on the S&P/BVL Peru Select Index or representative value of these shares in the company’s portfolio.	2	0.00%
TOTAL	5,585	100.00%
Ownership by shareholders or representative value that is listed on the S&P/BVL Peru Select Index according to residency (at the end of the fiscal year).	Number of holders	% of participation (3)
Domiciled	5,381	5.32%
Not Domiciled	204	94.68%
TOTAL	5,585	100.00%

 

(1)

Term “Relatives” in accordance with the Rules for Indirect Property, Association and Economic Groups.

(2)

Term “Entities” according to the Rules for Indirect Property, Association and Economic Groups.

(3)

Two decimals.

 

 

E. Contacts

 

GRI 2-3

 

 

 

F. Complementary information 

 

Information related to the stock market

 

Credicorp’s common actions are negotiated in New York’s stock market and in BVL. The following chart shows, for the indicated periods, the maximum and minimum sell prices of the common actions in the BVL. Common actions are quoted in American dollars in the NYSE and in the BVL.

 

Quotes 2022 

 

CREDICORP LTD.

 

Equity

 

			QUOTES 2022
							Average Price
ISIN Code	Mnemonic	Year-Month	Opening	Closing	Max	Min
			$	$	$	$	$
BM G2519Y 1084	BAP	2022-01	124.03	142.90	146.30	123.70	136.32
BM G2519Y 1084	BAP	2022-02	140.93	150.00	160.00	134.00	150.47
BM G2519Y 1084	BAP	2022-03	151.50	172.72	181.40	147.67	173.90
BM G2519Y 1084	BAP	2022-04	173.02	139.45	173.02	135.00	153.83
BM G2519Y 1084	BAP	2022-05	137.36	141.08	144.42	118.95	134.92
BM G2519Y 1084	BAP	2022-06	141.18	119.68	142.86	118.87	127.07
BM G2519Y 1084	BAP	2022-07	119.70	128.50	130.19	113.95	123.73
BM G2519Y 1084	BAP	2022-08	130.46	129.33	143.00	128.25	135.29
BM G2519Y 1084	BAP	2022-09	127.28	123.12	132.55	118.10	129.01
BM G2519Y 1084	BAP	2022-10	126.06	145.80	146.10	126.06	134.02
BM G2519Y 1084	BAP	2022-11	150.25	152.80	158.05	143.15	153.33
BM G2519Y 1084	BAP	2022-12	150.50	135.25	151.70	131.90	135.49

 

 

 

Sustainability Report

 

 

 

 2022

 

 

 

 

Sustainability Report 

---

 

Letter from the President of the Sustainability Committee	74
Executive Summary	75
Milestones in 2022 and sustainability Aspirations 2023-2025	78
Sustainability Strategy	80
Integrating Sustainability	87
Social Management	95
Environmental Management	125
Governance	134
Annexes	155
GRI Index	176
SASB Index	187

 

 

Letter from the President of the Sustainability Committee 

GRI 2-1, 2-2, 2-3, 2-4, 2-5, 2-22

 

Executive Summary 

GRI 2-1, 2-2, 2-3, 2-4, 2-5, 2-22

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This Report corresponds to Credicorp Ltd, which is based in Hamilton, Bermuda and includes, in line with the scope of Credicorp’s Corporate Sustainability Policy, information on the main subsidiaries that operate in Peru and other countries, including Colombia, Bolivia, Chile, Panama and the United States¹⁵. These main subsidiaries are: Banco de Crédito del Perú (BCP), Mibanco Perú, Mibanco Colombia, BCP Bolivia, Pacífico Seguros, Prima AFP and Credicorp Capital. The information presented is consolidated at the Credicorp Ltd. level unless otherwise stated. There is no re-expression of information presented in previous reports. The reporting period extends from January 1 to December 31, 2022.

 

The current Sustainability Report is annexed to Our Annual Report. These documents are published together in February 2023. It is important to note that we have a governance process to review and approve both documents, which were approved in the last session held by the Board. The information presented in this Report was not verified externally. The financial information herein is derived from the audited financial statements. Additionally, Credicorp’s carbon footprint is audited by an external auditor.

 

¹⁵ Not exhaustive. For more information on the companies of the group, review the “Description of the Company” section in the Annual Report.

 

Milestones in 2022 and sustainability Aspirations 2023-2025 

 

MILESTONES 2022

 

 

 

 

In addition to our achievements this year, we have developed the following aspirations for the next 3 years, all of which are contemplated in our sustainability strategy.

 

ASPIRATIONS 2023-2025

 

E	● Design a corporate environmental strategy that defines our ambition and provides a road map that considers structure, strategic issues, opportunities to grow our portfolio of sustainable solutions, risk management, reporting.  ● Continue improving our ESG risk management, including conducting a diagnostic regarding our alignment with TCFD’s recommendations and strengthen the teams’ capacities relative to managing the portfolio’s emissions. Execution of plans to reduce our direct environmental footprint with an eye on becoming carbon-neutral by 2032.
S	● Accelerate financial inclusion through digital wallets (Yape and Soli), microlending (Mibanco) and inclusive insurance (Pacífico Seguros).  ● Contribute to including more women in the financial system through products, services and processes with a gender focus (for example: Crédito Mujer).  ● Scale Prima’s pension education program and BCP’s initiative to determine the impact of financial education on modifying clients’ undesirable financial behavior.  ● Strengthen the impact of our financial education initiatives through digitalization, alliances and efforts to develop relevant contents for each segment.  ● Implement impact metrics at the subsidiary level (base indicators, measurement and objectives).
G	● Improve our reporting process.  ● External assessment of the Board.
Transversal	● Implement metrics to measure impacts for our subsidiaries’ initiatives (base indicators, measurement and objectives).  ● Achieve a higher level of integration of ESG factors in financial processes  ● Continue integrating ESG factors in investment processes.

Sustainability Strategy 

GRI 2-24

 

SDG 5, 8, 9, 10, 13, 16, 17

 

We have developed a Sustainability Strategy 2020-2025, which is aligned with our Purpose, Vision, Stakeholders and priority SDG. For more details on our sustainability strategy, please review Our Sustainability Strategy 2020-2025 and the section “Governance – Sustainability Governance – Implementation Teams”.  

 

 

 

 

 

 

 

 

 

¹⁶ AuMs: Assets under management 

 

 

Affiliations and Adhesions

GRI 2-23, 2-28

 

In addition to our commitment to Agenda 2030, at the end of 2022, we were affiliated with the following local and international initiatives through Credicorp or our subsidiaries.

 

Organization	Date of Adherence	Reason for Adherence
Carbon Disclosure Project (CDP)  https://www.cdp.net/es  Largest coalition of investors in the world. Gathers and disseminates information on companies’ environmental impact.	Credicorp – 2010 1º Peruvian signatory company of CDP  Rating 2022: C - Awareness.   Credicorp Capital Asset Management - 2021	Allows us to identify gaps to combat climate change.
UN Global Compact Global  https://www.unglobalcompact.org/    + 20 years +162 countries +21,000 member organizations	Credicorp - 2022  BCP Bolivia – 2020  Prima AFP – 2013  BCP – 2009  Pacífico Seguros – 2008	Shows our commitment to sustainability and Human Rights in a public and visible way and allows us to be part of a global network for learning and innovation.
Perú Sostenible   https://perusostenible.org/    Largest network of companies in Peru that promote Sustainable Development.	Credicorp – 2021    Mibanco Perú – 2021  Pacífico Seguros – 2012  Prima AFP – 2012  BCP – 2009	Exchange of good practices, learning and achievements with national and international leaders from all sectors.   2022 – Perú Sostenible Event: exchange regarding the challenges of and progress toward complying with the 17 SDG  ● Our CEO, Gianfranco Ferrari co-presided this event  ● We invited a global expert to a dialogue about sustainability in the financial sector.
Nexos +1  https://nexosmasuno.com/    Nexos+1 promotes business transformation to combat climate change in Latin America.	Credicorp – 2021    Pacífico Seguros – 2021  Prima AFP – 2018	We are working with other companies to take on challenges related to combatting climate change as we seek to harness opportunities

 

 

Es Hoy  https://eshoy.pe/    Movement of business leaders committed to working for an inclusive, prosperous and sustainable Peru. 38 members +15 industrial sectors.	Credicorp – 2021    Mibanco Perú– 2022  Credicorp Capital – 2022  BCP – 2021	Our CEO Gianfranco Ferrari is a member of the Directing Council. The general managers of BCP, Mibanco and Credicorp Capital are also part of this organization.
Executive Board for Green Taxonomy  Green Protocol (Protocolo Verde)  Participative space driven by the Ministry of the Environment in Peru.	Credicorp – 2022	Active follow-up on the implementation of the Roadmap for Green Finances and an initiative to drive the adoption of a national Green Taxonomy, which is currently under development.

 

Other affiliations and adhesions 202217

Equator principles

PRI18

TCFD

PIR19

ABE20

CFA Institute

Red Acción

Women’s World Banking

UN Women

Colombia FIntech

Asobancaria

Asomicrofinanzas

APESEG

ASOMIF

ASBANC

UNEPFI

AAFP21

BCP

✔️

✔️

✔️

Mibanco

✔️

✔️

✔️

✔️

✔️

Pacífico Seguros

✔️

✔️

✔️

✔️

Prima AFP

✔️

✔️

✔️

✔️

✔️

✔️

Credicorp Capital

✔️

✔️22

✔️

Mibanco Colombia

✔️

✔️

✔️

✔️

✔️

✔️

BCP Bolivia

✔️

¹⁷ Not exhaustive

¹⁸ Principles for Responsible Investment (Global).

¹⁹ Program for Responsible Investment. Local initiative (Peru) related to responsible investment.

²⁰ Asociación de Buenos Empleadores (Peru).

²¹ Asociación de AFP

²² Credicorp Capital Asset Management

 

 

Awards and Recognition

 

The recognition we have obtained for our initatives motivates us dig deeper to implement our strategy and continue integrating sustainability in all we do. 

 

Map of initiatives by platform

 

 

 

²⁴ Percentage at the global level and for the banking industry

 

 

 ²⁵7.4 of every 10 Mibanco clients have accepted the optional insurance policies attached to their loan

 

 

²⁶ Data corrected based on the 2021 report

 

 

²⁷ Sales force that specializes in placement

 

 

Transforming Financial Education

 

Material Issues Financial Education

 

GRI 3-3, 203-1, 203-2, 413-1 

SASB FN-CB-240a.4 

Pillar 2

 

HELPING PEOPLE IMPROVE THEIR FINANCIAL KNOWLEDGE AND SKILLS SO THAT THEY CAN MAKE BETTER DECISIONS

 

Financial education helps people develop a deeper understanding of the financial products and services available in the market so that they can make better decisions. We are convinced that a solid financial culture strengthens Peruvian’s trust of financial institutions; builds their confidence as users; and promotes healthy relations with money and the adequate use of financial products and services. In this context, financial education is a key enabler of responsible financial inclusion.

 

At Credicorp, we have worked on different initiatives for financial education, including (a) mass communication of educational content, (b) on-site and online training programs and (c) education efforts for businesses. Each model seeks to impart knowledge and tools to clients and the public in general to position them to take full advantage of everything the financial system has to offer.

 

Our Financial Education Platform seeks to align different initiatives across our subsidiaries; expand our scope through the use of digital channels and key partnerships; and share successful cases that can be replicated at the Group’s companies.

 

Subsidiary	Initiative	Achievements 2022	Partnerships to strengthen our scope
BCP	ABC at BCP  Mass media, training courses and education from a business perspective to provide advice and useful tools for personal finance to clients and non-clients	Mass media:  ●   49 million accumulated views for the Web series 5to Piso   Training program:  ●   234,760 people completed online courses   ●   54,798 young people completed the course for universities and institutes   ●   15,477 people who were not formally included in the financial system were trained  Education from a business perspective:  ●   83,385 people improved their financial behavior through pilots of alerts	●   Ministries – Training for scholarship students, rural agricultural workers, putting looking for employment  ●   Municipality of Lima – Training on markets ●   NGOs– Training for community soup kitchens and communal food pots  ●   National Program for Scholarships and Educational Loans (Pronabec) through universities, institutes and Yape ●   Association of Banks of Peru (Asbanc): Finanzas al Toqque – microbusiness owners and families  ●   Superintendency of Banking and Insurance (SBS) – Global Savings Week

 

 

Mibanco	●       Basic Program for Digital Advice: training and advice for business and financial management    ●       Munay: Volunteer programs to provide advice and training to entrepreneurs   ●      Miconsultor: training program for clients in partnership with universities throughout the country    ●       Training workshops with partners: leveraged synergies with Public-Private Partnerships to promote financial inclusion and education    ●       Mejorando Mi Bodega (Improving my Bodega): Webinars on business and financial management imparted by experts from Centrum, ISM and Mibanco    ●      Talking with Experts Workshop: Webinars on business and financial management imparted by experts. Ended in March 2022.	251,153 people received at least one training session from Mibanco (identified with name and document number) through 378,134 training sessions (training and advisory sessions through the Financial Education program rolled out throughout 2022).  Some people participated in two or more sessions.	PBAFD  ●  Portfolio of clients     Munay:  ●  Teletón  ●  CERTUS  ●  Webinars Munay    Miconsultor:  ●  Universities     Partners:  ●  Calidda   ●  Municipality of Lima   ●  Mincetur    Mejorando Mi Bodega:  ● Mejorando mi bodega Program (Centrum and ISM)
Pacífico Seguros	●       ABC at Pacífico: tools for edutainment to educate people about insurance and generate awareness of its importance in different stages of a person’s life.   ●       Comunidad Segura: Prevention program with social impact to prevent risks in vulnerable communities, in partnership with our client companies. This program’s objective is to build a more resilient society in the face of unexpected events and to generate awareness of natural risks and fire prevention.   ●       Protege 365: seminars, training, advice, inspections and support material for management systems at client companies. The aim is to help our clients strengthen their systems for accident prevention; reduce claims; and consequently, protect their employees.	Mass media:   ●  5.1 million unique visitors to the portal of ABC at Pacifico  ●  +602,638 impacted through notes published in the blog of ABC of Pacifico  ●  +900 thousand impacted with educational content through the video show “salado y piña”.    Training programs:  ●  +12 thousand people trained through the Online Classroom in the portal of ABC of Pacifico  ●  11,117 people trained on risk prevention through Comunidad Segura  ●  2,197 companies trained; impact generated through advisory services and training for risk prevention programs through Protege 365. Additionally, +36 thousand employees at these	Comunidad Segura:   ●   Companies ●  University  ●  Institute ●  BCP  ●  Mibanco  ●  Foundations and civil society organizations

 

		companies were trained with contents relative to prevention of occupational risks.
Prima AFP	●       ABC de la Cultura Previsional (ABC of Pension Savings): to make more informed financial decisions and obtain a dignified retirement    ●      Educational Web Series: Explains concepts of the PPS28 in a fun and humorous way.	Mass Media:  ●   11.7 million effective visualizations of the Web series “El Depa”  ●   Educational Web “Ahorrando a Fondo”: 114,548 visualizations in the month that the program was launched (Dec.22)   Training programs:    ●  +61 thousand people trained	●  ABC de BCP  ●  Contigo Emprendedor  ●  +15 public and private institutes at the national level.
BCP Bolivia	●       La Academia de Clientes (the Client Academy): Program for digital financial inclusion so that clients acquire capacities that allow them to conduct operations through digital channels. ●       Descubre: First interactive Financial Education Program of interactive program of Financial Education in Bolivia developed in the framework of the Association of Banks of Bolivia (ASOBAN). Innovative tool that integrates theory and practice in a simple and fun way. The public can set goals, administer finances effectively and learn about the Bolivian financial system.	Training programs:  ●  19,833 clients trained through the La Academia de Clientes.  ●  18,790 clients trained through Descubre	●
Mibanco Colombia	●       Basic Program for financial and digital advice: empower and strengthen the relations model with Sustainable practices through financial education and efforts to create environmental awareness. The goal is to accompany our clients as they ascend their spiral of progress. Targeted clients are those who are behind on their payments or express an interest in accessing more educational resources to enrich their financial knowledge. ●       Miacademia del Progreso: education for business management	Training programs    ●  10,299 clients trained through the Basic Program for Financial and Digital Advice  ●  10,840 clients trained through Miacademia del Progreso (My Academy for Progress) ●  223 clients trained through Dr. Financiero (Dr. Finance)	●  Asomicrofinanzas

To learn about the results of each of the programs at the subsidiaries, and see the comparative information from 2021, see our Financial Education Annex.

 

²⁸ Private Pension System

 

 

 

 

³² There are differences vs 2021 Report given that some companies’ updates were made after the report was published.